On 9 December 2025, the Paris Court of Appeal (International Commercial Chamber, Pole 5, Chamber 16, 9 December 2025, No. 22/04007), acting as the setting-aside court, brought the long-running Sultan of Sulu arbitration saga to an end under French law. The Paris Court of appeal set aside in its entirety the final arbitral award rendered in Paris on 28 February 2022, on the ground that the arbitrator lacked jurisdictional authority.
This third instalment completes our analysis of the Sultan of Sulu arbitration saga under French law, following (i) the Paris Court of Appeal’s refusal to recognise and enforce the partial award on jurisdiction and (ii) the French Supreme Court’s confirmation that the arbitration clause had lapsed.
The decision follows the French Supreme Court's ruling of 6 November 2024, widely commented here, which had confirmed that the arbitration clause contained in the 1878 agreement (the "Agreement") had lapsed as a result of the disappearance of the designated arbitral function, and had therefore upheld the refusal to recognise and enforce the partial award on jurisdiction.
Key Events
Below are the key dates of this unique dispute:
- 1878 – Agreement between the Sultan of Sulu and European nationals
- 2013 – Malaysia ceases payments
- 25 May 2020 – Partial award on jurisdiction
- 2021–2022 – Annulment of appointment by Spanish courts / transfer of the seat to Paris
- 28 February 2022 – Final award (USD 14.92bn)
- 6 June 2023 – Paris CA refuses enforcement of the partial award
- 6 November 2024 – French Supreme Court confirms the clause had lapsed
- 9 December 2025 – Paris CA sets aside the final award
Background of the case
As a reminder, the dispute arose out of an agreement concluded in 1878 between the Sultan of Sulu and two European nationals concerning the exploitation of territories on the northern coast of the island of Borneo, now part of the State of Sabah in Malaysia. Drafted in classical Malay (jawi), the agreement provided for annual payments to the Sultan and his heirs (the "Heirs") and included a dispute resolution clause referring disputes to the British Consul General in Borneo.
Following Malaysia's cessation of payments in 2013, the Sultan of Sulu's Heirs commenced arbitral proceedings. In the absence of any intervention by the British authorities, a Spanish court, acting as a judge in support of the arbitration, appointed a sole arbitrator. The arbitrator upheld his jurisdiction in a partial award dated 25 May 2020.
Subsequently, the Spanish courts annulled the arbitrator's appointment procedure and prohibited the continuation of the arbitration, without however setting aside the partial award on jurisdiction, which remained the final decision on the seat. To circumvent this prohibition, the arbitrator then transferred the seat of the arbitration to Paris, where he rendered a final award on 28 February 2022, ordering Malaysia to pay USD 14.92 billion.
This led to an unusual procedural situation: while the partial award on jurisdiction was final on the issue of the seat, and in principle capable of recognition and enforcement under the New York Convention, its enforcement was refused in France. By a decision of 6 June 2023, upheld by the French Supreme Court on 6 November 2024, the Paris Court of Appeal held that the arbitration clause had lapsed.
It was in this context that the International Chamber of Commerce of the Paris Court of Appeal was seized of the application to set aside the final award rendered in Paris. The Paris Court of Appeal was required to determine whether the parties had consented to arbitration, or whether their consent was limited to arbitration conducted exclusively by the British Consul General in Brunei, a function which no longer exists.
The decision of the Paris Court of appeal regarding the final arbitral award
By its decision of 9 December 2025, the Paris Court of Appeal set aside the final award in its entirety pursuant to Article 1520(1) of the French Code of Civil Procedure, under which an award may be set aside where the arbitral tribunal has wrongly upheld or declined jurisdiction
Beyond the mere finding that the arbitration clause had lapsed, the Court’s reasoning frames the issue as one of absent jurisdictional authority: not a defective constitution of the tribunal, but a radical absence of consent to arbitration. This analytical distinction explains why Article 1520(1) CPC was engaged at the setting‑aside stage.
Relying on well-established principles of French international arbitration law, the Court recalled that the existence and effectiveness of an arbitration agreement must be assessed solely by reference to the parties' common intention, interpreted in accordance with good faith and the principle of effectiveness. Only common intention can confer jurisdictional authority on an arbitrator.
While French courts try to favour an interpretation which supports arbitration agreements, the principle of effectiveness cannot recreate consent where it has vanished. The Court prioritised the parties’ common intention over any pro‑arbitration presumption, and confirmed that effectiveness yields to the primacy of consent.
The Court found that the disputed clause did not designate an arbitrator intuitu personae, but referred to a specific function (intuitu officium), namely that of the British Crown's Consul General in Brunei. That designation constituted a decisive and inseparable element of the parties' consent to arbitration. Therefore, the disappearance of the function entailed the disappearance of the consent to arbitration itself.
By characterising the designation as intuitu officii, the Court refused to “salvage” the clause through functional substitution (e.g., by appointing another authority or institution). The decision thus differs from scenarios of pathological clauses or institutional default: here, the very object of consent was the specific public office, not an abstract arbitral mechanism.
The Court, therefore, held that the arbitrator could not have validly maintained that he had the jurisdiction to decide the matter. Instead, the entirety of the award where he had affirmed his jurisdiction should be set aside, for lack of jurisdictional authority.
The decision highlights the risks of clauses tied to a specific public function, particularly in long‑term agreements, and underscores the need for robust fallback mechanisms.
Finally, the case provides a good illustration of the mechanism of "setting aside by consequence", which has been included in the ongoing reform project of French arbitration law, whereby the annulment of one award could extend to another award rendered in the same matter where the same jurisdictional defect applies.
"Setting Aside by Consequence will work to ensure that once a partial award on jurisdiction is refused recognition in France by the Paris Court of Appeal (such as the decision of the Paris Court of Appeal in this case on 6 June 2023) on the ground that the arbitration clause had lapsed, the same defect automatically leads to the setting aside of related awards where the same defect applies without the need for a separate and fully reasoned jurisdictional analysis.
The aim is procedural economy and legal certainty: avoiding duplicative rounds of judicial review when the decisive flaw has already been authoritatively identified.
In the present case, this would likely have avoided the need for a second round of judicial scrutiny before the Paris Court of Appeal, as the jurisdictional flaw identified in respect of the partial award was equally decisive for the final award. Whilst this decision is the helpful end to a long-running saga, it does raise the question of whether the French Courts (and the new reforms) is yet another example of countries chipping away at the promise of states under the NY Convention to enforce arbitral awards.
Key takeaways for practitioners
- Avoid arbitration clauses tied to a specific office or public function unless a clear fallback mechanism is included.
- In long‑term or historical contracts, build adaptability (replacement authorities, institutional rules, and seat flexibility).
- Treat partial awards on jurisdiction with caution where recognition has been refused in key jurisdictions.
- Expect French courts to prioritise genuine consent over expansive pro‑arbitration constructions.
