Exclusive: After $15 bln award, Sultan's heirs target Malaysian properties in Paris

KUALA LUMPUR: French bailiffs attempted to enforce a seizure order on three Paris properties owned by the Malaysian government in a case linked to a $15 billion court award to descendants of a former sultan, according to the heirs' lawyers and court documents seen by Reuters.

The bailiffs tried to assess the properties on Monday following a court-issued seizure order in December, but Malaysian officials at the Paris embassy turned them away, the lawyers and the Malaysian government said.

The Filipino heirs of the last Sultan of Sulu are seeking to enforce a $14.9-billion award granted to them by a French arbitration court last year to settle a dispute with the Malaysian government over a colonial-era land deal.

Malaysia, which did not participate in the arbitration, maintains the process was illegal and has obtained a stay on the ruling in France.

The Paris properties are only the third set of Malaysian assets that the heirs have publicly acknowledged going after. They have secured a seizure order for Luxembourg units of state oil firm Petronas and have sought permission from a Dutch court to seize assets in the Netherlands.

The award is enforceable globally against most Malaysian assets, aside from diplomatic premises, under a U.N. convention on arbitration.

Despite the stay, a French judge in December last year granted the heirs' request to seize three Malaysian government properties in Paris to settle a debt of 2.3 million euros ($2.46 million) that they said was owed to them, according to court documents shared by the heirs' lawyers.

The seizure attempt in Paris has not been reported previously.

Malaysia had been ordered to pay the heirs the sum under a preliminary arbitration award granted to them in Spain, which was not bound by the stay in France, the lawyers said.

The Malaysian law ministry did not respond to a request for comment on the preliminary award.

The French judge also found that the properties, located in the 16th arrondissement near the Malaysian embassy in Paris, did not qualify as diplomatic premises, according to the court documents.

Unlike the embassy, they bore no official signage and were not subject to French tax exemptions, the judge said.

On Monday, French bailiffs attempted to evaluate the three properties in preparation of a sale, the lawyers said. The proceeds of the sale would go to the heirs.

A Malaysian law ministry spokesperson said the bailiffs appeared at the Malaysian embassy in Paris but were turned away. They declined to comment further. Malaysia's foreign ministry and its embassy in Paris declined to comment.

Reuters could not establish if the bailiffs attempted to enter all three properties subject to the seizure order.

Paul Cohen, a lawyer for the heirs, said the court order was "unambiguous" in its directive to seize the properties and that it would be up to the court to decide the next steps.

"To the extent that Malaysians blocked entry to the bailiffs, they are in open defiance of a French court order," Cohen said.

The Malaysian government and the French court, the Tribunal Judiciaire de Paris, did not immediately respond to requests for comment.

Last month, Luxembourg court bailiffs issued fresh seizure orders for two units of Petronas PETR.UL in a similar effort. The company has said the heirs' actions were baseless and that it will continue to defend its legal position.

Malaysia has previously vowed to take all legal measures to protect its assets worldwide.

The dispute stems from a deal signed in 1878 between two European colonists and the Sultan of Sulu for use of his territory in present-day Malaysia – an agreement that independent Malaysia honoured until 2013, paying the monarch's descendants a token sum annually.

Kuala Lumpur stopped the payments after a bloody incursion in 2013 by supporters of the former sultanate who wanted to reclaim land from Malaysia. The heirs of the sultan, who once controlled a territory spanning rainforest-covered islands in the southern Philippines and parts of Borneo island, say they were not involved in the incursion and sought arbitration over the suspension of payments.