The Sabah Law Society on Constitutional Duty and the Special Grant Owed to Sabah

1 July 2023

The Sabah Law Society (SLS), an independent professional body of advocates dedicated to upholding justice and assisting the public in all matters relating to the law, today addresses the crucial issue of the Federal Government's constitutional duty to pay a special grant annually to the State of Sabah in accordance with the Federal Constitution.

SLS firmly upholds the cause of justice without regard to its own interests or those of its members, remaining uninfluenced by fear or favour. As a non-political organisation, our main objective is to serve the public interest and ensure the fair implementation of the law.

It is important to emphasise that Sabah's 40% entitlement, which was due to be paid immediately after the formation of the Federation of Malaysia on 16 September 1963, is a fundamental right granted to Sabah under the Malaysia Agreement 1963 (MA63). This entitlement, alongside other rights, was explicitly mentioned in the Report of the Inter-Governmental Committee dated 27 February 1963, highlighting the significance of Sabah's financial provisions for its development needs.

Sabah and Sarawak were acknowledged to be economically behind Malaya at the time of Malaysia's formation. Thus, the duty to pay Sabah's 40% entitlement was crucial in bridging the economic gap and ensuring the progress and well-being of the people of Sabah.

Article 112C and section 2 of Part IV in the Tenth Schedule of the Federal Constitution clearly outline the constitutional duty of the Federal Government to pay this entitlement to Sabah. However, this duty is subject to review, as prescribed under Article 112D.

The first review should have taken place no later than 1969, followed by a second review no later than 1974.

On 14 April 2022, the Federal and Sabah governments announced their agreement on the payment of annual grants for the period of 2022 to 2026, yet negotiations regarding Sabah's 40% entitlement were still ongoing. However, on 20 April 2022, the Federal Government published a Review Order that revoked the Sabah Special Grant (First Review) Order 1970, significantly breaching the constitutional duty owed to the people of Sabah.

SLS deems this action by the Federal Government a serious breach of its constitutional duty, which has had significant legal consequences. The people of Sabah have suffered the consequences of this breach for a prolonged period from 1974 to 2021, amounting to 48 years of denied entitlement. These are what we refer to as The Lost Years, and it is the people of Sabah who bear the burden.

Before initiating the 40% claim action, SLS engaged in extensive consultations with political parties across the political divide, ensuring transparency and inclusivity in our approach.

We are heartened to note the positive response from the State Government, as Chief Minister Datuk Seri Panglima Haji Hajiji Haji Noor acknowledged SLS's application for a judicial review in respect of the 40% net revenue Special Grant that Sabah is entitled to under the Federal Constitution. The State Government recognises our initiative as a non-partisan, non-political pursuit aligned with the constitutional arrangements when Sabah joined Malaysia in 1963.

It is crucial to emphasise that our action is initiated solely in the interest of the people of Sabah, regardless of political affiliations or party agendas. SLS remains committed to this cause and will continue to champion justice and the fulfilment of constitutional obligations.

The people of Sabah deserve their rightful entitlements, and SLS will steadfastly pursue this and other matters through all legal means necessary, ensuring justice is served and constitutional duties are upheld.

Roger Chin

President

Sabah Law Society