Territory in the 1878 agreement: from the Pandassan River on the north west coast to the Sibuco River in the south
The North Borneo dispute, also known as the Sabah dispute, is the territorial dispute between Malaysia and the Philippines over much of the eastern part of the state of Sabah. Sabah was previously known as North Borneo prior to the formation of the Malaysian federation. The Philippines, presenting itself as the successor state of the Sultanate of Sulu, retains a "dormant claim" on Eastern Sabah on the basis that the territory was only leased to the British North Borneo Company in 1878, with the sovereignty of the Sultanate (and subsequently the Republic) over the territory never having been relinquished. However, Malaysia considers this dispute as a "non-issue" as it interprets the 1878 agreement as that of cession, and it deems that the residents of Sabah (including Eastern Sabah) had exercised their right to self-determination when they joined to form the Malaysian federation in 1963.
The first concession treaty was signed by Sultan Abdul Momin
of Brunei on 29 December 1877, appointing Baron de Overbeck
as the Maharaja
Sabah, Rajah Gaya and Sandakan
The second concession treaty was signed by Sultan Jamal ul-Azam of Sulu on 22 January 1878 also appointing Baron de Overbeck as Dato Bendahara and Raja Sandakan, approximately three weeks after signature of the first treaty.
The 1878 agreement was written in Malay using the Jawi script, in which the contentious wordings are as follows:
sudah kuredhai pajakan dengan keredhaan dan kesukaan kita sendiri kepada tuan Gustavus Baron von Overbeck yang tinggal dalam negeri Hong Kong dan kepada Alfred Dent Esquire yang tinggal dalam negeri London... sampai selama-lamanya sekalian perintah dan kuasa yang kita punya yang takluk kepada kita di tanah besar Pulau Borneo dari Sungai Pandasan di sebelah barat sampai sepanjang semua tanah di pantai sebelah timur sejauh Sungai Sibuku di sebelah selatan.
The keyword in the agreement is the ambiguous term pajakan, a Malay term which was translated by Spanish linguists in 1878 and by American anthropologists H. Otley Beyer and Harold Conklin in 1946 as "arrendamiento" or "lease". However, the British used the interpretation of historian Najeeb Mitry Saleeby in 1908 and William George Maxwell and William Summer Gibson in 1924, which translated pajak as "grant and cede".
It can be argued however, that "pajakan" means "mortgage" or "pawn" or even "wholesale", as per the contemporary meaning of "pajakan" in Sulu and Malay, which essentially means that the land is pawned in perpetuity for the annual cession money, and the sultanate would need to repay the entire infinite value of the territory to redeem it back. Furthermore, the term "selama-lama" which means "forever" or "in perpetuity" indicate a binding effect beyond the lifetime of the then Sultan.
The ambiguity led to the different interpretation of the original Malay text, as shown in two versions below:
- British version
...hereby grant and cede of our own free and sovereign will to Gustavus Baron de Overbeck of Hong Kong and Alfred Dent Esquire of London...and assigns for ever and in perpetuity all the rights and powers belonging to us over all the territories and lands being tritutary to us on the mainland of the island of Borneo commencing from the Pandassan River on the north-west coast and extending along the whole east coast as far as the Sibuco River in the south...
- Sulu version
...do hereby lease of our own freewill and satisfaction to...all the territories and lands being tributary to [us] together with their heirs, associates, successors and assigns forever and until the end of time, all rights and powers which we possess over all territories and lads tributary to us on the mainland of the Island of Borneo, commencing from the Pandassan River on the west coast to Maludu Bay, and extending along the whole east coast as far as Sibuco River on the south...
Sultan of Sulu and Suite.
Throughout the British administration of North Borneo, the British government continued to make the annual "cession money" payment to the Sultan and its heir and these payments were expressly shown in the receipts as "cession money". In a 1961 conference in London, during which a Philippine and British panel met to discuss on the Philippine claim of North Borneo, the British panel informed the Congressman Salonga that the wording of the receipts has not been challenged by the Sultan or its heir. 
During a meeting of Maphilindo between the Philippine, Malayan and Indonesian governments in 1963, the Philippine government said the Sultan of Sulu wanted the payment of 5,000 from the Malaysian government. The first Malaysian Prime Minister at the time, Tunku Abdul Rahman said he would go back to Kuala Lumpur and get on the request. Malaysia considers the amount an annual "cession" payment for the land, while the sultan’s descendants consider it "rent".
The foregoing Sulu claim rests on the treaty signed by Sultan Jamalul Alam of Sulu appointing Baron de Overbeck as Dato Bendahara and Raja Sandakan on 22 January 1878. However, a further, earlier treaty signed by Sultan Abdul Momin of Brunei appointed Baron de Overbeck as the Maharaja Sabah, Rajah Gaya and Sandakan. This was signed on 29 December 1877, and granted the territories of Paitan as far as the Sibuco River, which overlaps the Sulu Sultanate's claim of their dominion in Sabah.
As attested to by the International Court of Justice, the Sultan of Sulu relinquished the sovereign rights over all his possessions in favour of Spain, based on the "Bases of Peace and Capitulation" signed by the Sultan of Sulu and the crown of Spain in Jolo on 22 July 1878. The Sultan declared beyond discussion the sovereignty of Spain over all the Archipelago of Sulu and the dependencies thereof.
In 1885, Great Britain, Germany and Spain signed the Madrid Protocol to cement Spanish influence over the islands of the Philippines. In the same agreement, Spain relinquished all claims to North Borneo which had belonged to the Sultanate in the past in favour of Great Britain.
The Spanish Government renounces, as far as regards the British Government, all claims of sovereignty over the territories of the continent of Borneo, which belong, or which have belonged in the past to the Sultan of Sulu (Jolo), and which comprise the neighbouring islands of Balambangan, Banguey, and Malawali, as well as all those comprised within a zone of three maritime leagues from the coast, and which form part of the territories administered by the Company styled the "British North Borneo Company".
1903 Confirmation of cession of certain islands
1903 Confirmation by Sultan of Sulu of cession of certain islands, transcription of first paragraph in Arabic Malay Script Jawi and Romanized Malay script. Red text is translated as "we hereby have willingly surrendered
to the Government of British North Borneo"
On 22 April 1903, the successor of Sultan Jamalul Alam, Sultan Jamalul Kiram II, signed a document known as "Confirmation of cession of certain islands", under which he grant and ceded additional islands, in addition to the land agreed upon in 1878, in the vicinity of the mainland of North Borneo from Banggi Island to Sibuku Bay to British North Borneo Company.
In the 1903 agreement, the ambiguous term "pajakan" was no longer used, but instead the phrase "kita telah keredhai menyerahkan kepada pemerintah British North Borneo" which literally means "we have willingly surrendered to the Government of British North Borneo" was used in the agreement, asserting the understanding of the Sulu Sultanate of that time of the meaning of the earlier agreement in 1878.
The confirmatory deed of 1903 makes it known and understood between the two parties that the islands mentioned were included in the cession of the districts and islands mentioned on 22 January 1878 agreement. Additional cession money was set at 300 dollars a year with arrears due for past occupation of 3,200 dollars. The originally agreed 5,000 dollars increased to 5,300 dollars per year payable annually.[note 1]
Macaskie decision of 1939
In 1939, propriety claimants Dayang Dayang Hadji Piandao and eight other heirs filed a civil suit regarding the "cession money" payable to the heirs of Sultan of Sulu—the then incumbent Jamalul Kiram II having died childless in June 1936. Chief Justice Charles Frederick Cunningham Macaskie of the High Court of North Borneo ruled on the share entitlement of each claimant.
This ruling has often been quoted by proponents of the Sulu Sultanate's claim as proof of North Borneo's acknowledgment of the sultan's ownership of the territory, although it was made solely to determine who as heir was entitled to the "cession money" of 5,300 Malaysian ringgit per year.
Map of the British North Borneo with the yellow area covered the Philippine claim to eastern Sabah, presented by the Philippine Government to ICJ
on 25 June 2001.
Annual "Cession Money" payment by Malaysian Embassy to the heirs of the Sultanate of Sulu.
The Sultanate of Sulu was granted the north-eastern part of the territory as a prize for helping the Sultan of Brunei against his enemies in 1658. However, on 22 July 1878, the Sultanate of Sulu relinquished the sovereign rights over all his possessions in favour of Spain, based on the "Bases of Peace and Capitulation" signed by the Sultan of Sulu and Spain in Jolo. The Spanish then claimed the area in northern Borneo but ending its claim soon under the Madrid Protocol of 1885 after the United Kingdom and Germany recognised its presence in the Philippine archipelago in return for the Spanish to stop interfering the British affairs in northern Borneo. Once the protocol had been ratified, the British North Borneo Chartered company proceeded with the administration of North Borneo, and in 1888, North Borneo became a British protectorate.
On 15 July 1946, the North Borneo Cession Order in Council, 1946, declared that the State of North Borneo is annexed to the British Crown, hence becoming a British colony. In September 1946, F. B. Harrison, former American Governor-General of the Philippines, urged the Philippine Government to protest this proclamation. America posited the claim on the premise that Spain had never acquired sovereignty over North Borneo, and thus did not have the right to transfer claims of sovereignty over North Borneo to the United Kingdom in the Madrid Protocol of 1885. This argument however, contradicts the treaty made between Spain and the Sultanate of Sulu in 1878, which expressly states that all of the territory of the Sultanate of Sulu is relinquished to Spain. Furthermore, the American view may be based on an erroneous interpretation of that part of the 1878 and the earlier 1836 treaties, that excluded North Borneo from the Sulu transfer to Spanish sovereignty (when in fact the exclusion merely referred to Spanish protection offered to the Sultan of Sulu in case he was attacked). The United States based government also refused to intervene in the dispute, officially maintaining a neutral stance on the matter and continuing to recognise Sabah as part of Malaysia. 
Exchange of notes constituting an agreement relating to the implementation of the Manila Accord
of 31 July 1963 between Philippines and Malaysia.
On 12 September 1962, during President Diosdado Macapagal's administration, the Philippine government claimed the territory of North Borneo, and the full sovereignty, title and dominion over it were "ceded" by the heirs of Sultan of Sulu, Muhammad Esmail E. Kiram I, to the Philippines. The Philippines broke off diplomatic relations with Malaysia after the federation was formed with Sabah in 1963, but probably resumed relations unofficially through the Manila Accord, in which the Philippines made it clear that its position on the inclusion of North Borneo in the Federation of Malaysia was subject to the final outcome of the Philippine claim to North Borneo. The representatives of Indonesia and the Federation of Malaya seconded that the inclusion of North Borneo into the aforementioned Federation "would not prejudice either the claim or any right thereunder". It was revealed later in 1968 that President Ferdinand Marcos was training a team of militants on Corregidor known as Operation Merdeka for infiltration into Sabah. The plan failed as a result of the Jabidah massacre.
Republic Act No. 5446 of the Philippines, which took effect on 18 September 1968, regards Sabah as a territory "over which the Republic of the Philippines has acquired dominion and sovereignty". On 16 July 2011, the Philippine Supreme Court ruled that the Philippine claim over Sabah is retained and may be pursued in the future.
Attempts at withdrawing claim
At the ASEAN Summit on 4 August 1977, Philippine President Ferdinand Marcos announced that the Philippines would take "definite steps to eliminate one of the burdens of Association of Southeast Asian Nations (ASEAN) — the claim of the Philippine Republic to Sabah". The statement, however was not followed through, despite negotiations and reassurances made by Marcos again in 1984 with Malaysian Prime Minister Mahathir Mohamad.
Following the overthrow of Marcos, President Corazon Aquino sought to officially drop the claim before the 1987 ASEAN Summit.
A bill to repeal Republic Act 5446 was filed by Leticia Ramos Shahani in the Philippine Senate in 1987. The bill was widely criticised for effectively dropping the country's claim over the territory. Muslim members of Congress also voiced their strong opposition to the measure for fears it would "endanger" the proprietary rights of the Sultanate of Sulu. This eventually led Shahani to not pursue the bill's passage.
While Aquino's successor Fidel V. Ramos was similarly unable to obtain consensus to drop the claim, he officially put the dispute aside in order to improve ties with Malaysia. Later, President Gloria Macapagal Arroyo was similarly unable to gain consensus on the matter. The 2009 Philippine baseline law does not include Sabah within Philippine territory, although the Philippine Government at the time stated that this did not affect the claim.
Formation of Malaysia
Prior to the formation of the Malaysia, two commissions of enquiry visited North Borneo, along with neighbouring Sarawak, to establish the state of public opinion there regarding merger with Malaya (and Singapore). The commission was mandated to address self-determination of the people of Sabah, i.e., the right of the people of Sabah to freely determine their own political status and freely pursue their own economic, social and cultural development.
The first commission, known as the Cobbold Commission, was established by the Malayan and British governments and was headed by Lord Cobbold, along with two representatives of Malaya and Britain (but neither of the territories under investigation). The Commission found that 'About one third of the population of each territory [i.e. of North Borneo and of Sarawak] strongly favours early realisation of Malaysia without too much concern over terms and conditions. Another third, many of them favourable to the Malaysia project, ask, with varying degrees of emphasis, for conditions and safeguards. The remaining third is divided between those who insist upon independence before Malaysia is considered and those who would strongly prefer to see British rule continue for some years to come'.
The Commission published its report on 1 August 1962 and made several recommendations. Unlike in Singapore, however, no referendum was ever conducted in North Borneo and Sarawak. Notably, the "referendum" did not involve the entire population of North Borneo and Sarawak at that time, but only representative consultations. The UN mission report stated that "[t]here was no reference to a referendum or plebiscite in the request..." and that "[t]he Mission accordingly arranged for consultations with the population through the elected representatives of the people, leaders of political parties and other groups and organisations, and with all persons who were willing to express their views". Indonesia and the Philippines rejected the findings of the Cobbold Commission.
The Manila Accord
In July 1963, a tripartite meeting was held in Manila between Indonesian president Sukarno, Philippines president Diosdado Macapagal and Malayan Prime Minister Tunku Abdul Rahman. The three heads of state signed an agreement known as the Manila Accord where Indonesia and the Philippines stated that they would welcome the formation of Malaysia "provided the support of the people of the Borneo territories is ascertained by an independent and impartial authority, the Secretary-General of the United Nations or his representative," and provided further that "the inclusion of North Borneo as part of Malaysia would not prejudice either the claim or any right thereunder" by the Philippines to the territory.
Pursuant to the Accord, a United Nations mission to Borneo was thus established that same year, comprising members of the UN Secretariat from Argentina, Brazil, Ceylon, Czechoslovakia, Ghana, Pakistan, Japan and Jordan. The Mission's report, authored by UN Secretary-General U Thant found ‘a sizeable majority of the people' in favour of joining Malaysia. Indonesia and the Philippines subsequently rejected the report's findings – and Indonesia continued its semi-military policy of konfrontasi towards Malaysia. The new Federation of Malaysia was proclaimed on 16 September 1963.
In a note verbale dated 7 February 1966, the government of Malaysia put itself on record "that it has never moved away from the Manila Accord of 31 July 1963 and the Joint Statement accompanying it and reiterates its assurance that it will abide by these agreements, particularly paragraph 12 of the said Manila Accord" (where Malaysia agreed that the inclusion of North Borneo in the Federation of Malaysia would not prejudice either the claim or any right of the Philippines to the territory) and "paragraph 8 of the Joint Statement" (where all parties agreed to seek a just and expeditious solution to the dispute by means of negotiation, conciliation and arbitration, judicial settlement, or other peaceful means of the parties' own choice in conformity with the Charter of the United Nations). In other words, this note verbale affirmed Malaysia's recognition of the still unresolved territorial dispute as regards North Borneo despite the findings of the Cobbold Commission or the 1963 UN Mission.
A joint communique by Malaysia and the Philippines dated 3 June 1966 also provides that both parties have agreed to abide by the Manila Accord for the peaceful settlement of the Philippine claim to North Borneo (now called "Sabah") by "[recognizing] the need of sitting together, as soon as possible, for the purpose of clarifying the claim and discussing the means of settling it to the satisfaction of both parties" in consonance with said Accord and its accompanying Joint Statement.
In 1968, the governments of Malaysia and the Philippines agreed to hold talks in Bangkok for the purpose of clarifying the territorial dispute and discussing the modes of settling it, as provided under the terms of the Manila Accord. As reflected in the official records of a plenary meeting of the United Nations General Assembly, the Malaysian delegation reportedly declared during such talks that "this exercise under the Joint Communique is over and done with" and that they "stalked out of the conference room, thus bringing the talks to an abrupt end," despite publicly announcing a few days earlier that they would discuss with their Philippine counterparts the modes of settlement for the issue.
To date, Malaysia maintains that the Sabah claim is a non-issue and non-negotiable, thereby rejecting any calls from the Philippines to resolve the matter in ICJ. Sabah authorities stated in 2009 that they see the claim made by the Philippines' Moro leader Nur Misuari to take Sabah to International Court of Justice (ICJ) as a non-issue and that they dismiss the claim.
Ops Merdeka and Jabidah Massacre
In 1967, President Ferdinand Marcos secretly authorized Major Eduardo "Abdul Latif" Martelino, a Muslim convert, to take charge of the operations of a secret commando unit code-named "Jabidah" and embark on an operation called "Project Merdeka" (merdeka means "freedom" in Malay) to destabilize and take over Sabah. The alleged mastermind, however, included leading generals in the Armed Forces of the Philippines (AFP), Defense Undersecretary Manuel Syquio, and Marcos himself.
This plan backfired when in 1968, due to some reason, the trainees refused to continue their training and demanded to be returned home. One batch of recruits were disarmed, with some of the trainees returned home and some others transferred to a regular military camp in Luzon. But another batch of recruits were killed by army troops, with only one survivor, Jibin Arula, managing to escape. This event is acknowledged as a major flashpoint that ignited the Moro insurgency in the Philippines.
In September 1985, 15-20 armed foreign pirates from the neighbouring Philippines landed in Lahad Datu, and killed at least 21 people and injured 11 others in a series of robberies and random shootings. In addition, some $200,000 from a local bank as well as another $5,000 from the Malaysia Airlines office were stolen.
Sovereignty over Ligitan and Sipadan islands case
In 2002, in a case concerning sovereignty over Ligitan and Sipadan islands between Indonesia and Malaysia, the International Court of Justice (ICJ) ruled in favour of Malaysia. The two islands are located in the Celebes Sea off the northeast coast of Borneo. The case was decided based on Malaysia's effectivités (evidence of possession and use by a particular state that is effective to claim title) on the two islands as both Indonesia and Malaysia did not possess treaty-based titles on Ligitan and Sipadan.
The Philippines applied to intervene in the case based on its territorial claim to North Borneo. Indonesia objected to the application and stated that the "Philippines raises no claim with respect to [the two islands] and maintains that the legal status of North Borneo is not a matter on which the Court has been asked to rule". Malaysia further contended that "the issue of sovereignty over Ligitan and Sipadan is completely independent of that of the status of North Borneo" and that "the territorial titles are different in the two cases". The application was ultimately rejected by the ICJ because of the non-existence of an "interest of legal nature" such that the Court did not find how the decision on the case concerning the two islands would affect the Philippines' territorial claim to North Borneo.
On 11 February 2013, a group of approximately 100–200 individuals, some of them armed, arrived by boat in Lahad Datu, Sabah from Simunul island, Tawi-Tawi in the southern Philippines. They were sent by Jamalul Kiram III, one of the claimants to the throne of the Sultanate of Sulu. Their objective was to assert their unresolved territorial claim to North Borneo. During the ensuing standoff, 56 of his followers were killed, along with 6 civilians and 10 Malaysian soldiers.
2020 diplomatic spat
||Teddy Locsin Jr.
Sabah is not in Malaysia if you want to have anything to do with the Philippines.
Replying to @Teddy Locsin Jr.
This is an irresponsible statement that affects bilateral ties. @MalaysiaMFA will summon the Philippines Ambassador on Monday to explain. Sabah is, and will always be, part of Malaysia.
On 27 July 2020, Philippine Foreign Secretary Teodoro Locsin Jr. posted a tweet replying to a post from the US Embassy in Manila on the "US donation of hygiene kits to Filipinos from Sabah, Malaysia" by saying that "Sabah does not belong to Malaysia". In response, the Malaysian Foreign Minister Hishammuddin Hussein rebuked the Philippine Foreign Secretary's tweet as an irresponsible statement that affects bilateral ties, and on 30 July 2020 summoned the Philippine ambassador. Locsin then summoned the Malaysian ambassador in a tit-for-tat move.
Sabah Chief Minister Shafie Apdal rejected the Philippine claim, suggesting the issues "should be resolved once and for all" with both the governments of Malaysia and the Philippines to officially have a "government-to-government talk" through the ASEAN platform. He earlier stated that the proposal by the central government of the Philippines to include Sabah territory as part of the Philippines territory in their passports was nothing short of provocation and the federal government of Malaysia must make an immediate response. Shafie added that Sabah is a "sovereign state" and this has been settled a long time ago where the residents of Sabah had been assured by the Malaysian federal government of "full security and protection" when it formed the Federation of Malaysia in 1963.
In addition, former Sabah chief minister, Musa Aman, told the Philippines to back off from continuing its claim over the state and to cease any agendas relating to Sabah and its internal politics. Similarly, former Malaysia foreign minister, Anifah Aman, who is also a Sabahan, criticised Locsin for his statement.
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Map of British North Borneo, highlighting in yellow colour the area covered by the Philippine claim, presented to the Court by the Philippines during the Oral Hearings at the ICJ on 25 June 2001
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