Euroviews. The Sultanate of Sulu case shows the litigation funding industry is abusing the global legal system

The Government of Malaysia is engaged in a $14.92 billion (€13.85bn) legal dispute that challenges the sovereignty of the country. 

The matter involves a group of individuals self-proclaiming to be heirs to the defunct Sultanate of Sulu, Jamalul Kiram II, who received an arbitration award in February 2022 following their claim that Malaysia is in breach of a colonial-era land treaty involving North Borneo or Sabah, which today is an indisputable part of Malaysia.

Since then, Malaysia has faced an arduous and ongoing battle, incurring significant costs and the deployment of government resources to thwart the claimants’ frivolous claims and protect over 16% of our national budget. 

Malaysia’s position is unwavering — the case represents sophisticated abuse of the arbitration process that has no basis in law, and is nothing more than an attempt to extort a sovereign nation. I call this "The Sulu Fraud".

One may question what relevance this case has to third-party litigation funding and the EU’s proposed regulation of the funding industry. 

The reality is that the Sulu case would not exist today without the involvement of a litigation funder, Therium, in bankrolling the claimants and their lawyers. Until today, we do not know how much the funder has spent. We do not know how the funder came to be involved. 

And we do not know how the funder came to an arrangement with a group of individuals who largely reside in the Philippines. However, we do know that they are putting profit ahead of justice.

The litigation funding industry has boomed in recent years across the world. According to some research, Europe’s share of the global litigation funding market is projected to reach nearly 16% of a total of $18bn (€16.7bn) by 2025. 

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