Malaysia Wins Respite in $15 Billion Spat With Philippines. Here's How the Fight Began.

Surrounded by three seas, the Malaysian state of Sabah, at the northern end of Borneo island, boasts picturesque beaches, stunning mountains — and a rich supply of palm oil and crude reserves. This idyllic place, however, has long been a source of friction with the neighboring Philippines — home to claimants to the throne of the defunct Sulu Sultanate — over the question of ownership. While the Malaysian government has rejected the would-be heirs’ claims, and even branded one of them a terrorist, a European court has ordered Malaysia to pay close to $15 billion as compensation. A Paris appeals court, however, rejected the grounds for that award. While the legal battle continues, new governments in both countries are figuring out how to possibly resolve the pesky issue.

The dispute originates from a commercial contract signed in 1878 by the Sulu Sultanate — an archipelago stretching across the Sulu Sea in Southeast Asia — with two European merchants who later formed the British North Borneo Company. There’s still debate on whether the sultan leased or ceded the area of Sabah under the agreement. The state fell under British control after World War II, and residents voted to join Malaysia when the country gained independence in 1963 — shortly after the sultanate ceded its sovereignty to the Philippines. The Malaysian government agreed to continue annual payments of 5,300 ringgit ($1,200) to the sultan’s descendants. In early 2013, Malaysian planes bombarded Sabah and sent ground troops after an armed clan from the Philippines invaded to try to reclaim territory. They were followers of a self-proclaimed sultan, Jamalul Kiram III. Dozens of people were killed, and the payments stopped after that. Kiram III, who died later that year, was an indirect descendant of the last uncontested sultan, Jamalul Kiram II, who died in 1936 with no heirs.