By Daniel John Jambun Borneo’s Plight in Malaysia Foundation (BoPiMaFo)
KOTA KINABALU: Borneo’s Plight in Malaysia Foundation (BoPiMaFo) notes the recent decision by the Federal Government to appeal the Kota Kinabalu High Court ruling concerning Sabah’s constitutional entitlement to 40% of the net federal revenue derived from the state.
Following this development, many Sabahans have expressed confusion, frustration and concern about what the appeal means and whether Sabah’s constitutional rights are now at risk.
Sabah’s 40% revenue entitlement is not a favour to be granted or withheld — it is a constitutional obligation that forms part of the safeguards agreed upon when Malaysia was formed in 1963.
BoPiMaFo believes it is important to clarify the legal issues involved so that the public can better understand what is actually happening.
Key Clarification:
The Federal Government’s appeal does not cancel Sabah’s constitutional entitlement to the 40% revenue share. The appeal merely asks the higher courts to review certain aspects of the High Court’s decision, particularly the mandamus order requiring the constitutional review process to be carried out within a specific timeframe.
Sabah’s 40% revenue entitlement is not a political demand or a matter of negotiation — it is a constitutional safeguard entrenched in the Federal Constitution.
Why the Federal Government Is Appealing
The Federal Government’s appeal does not automatically mean that Sabah’s constitutional entitlement has been rejected.
Rather, the Government is asking the higher courts to review certain aspects of the High Court’s decision.
In particular, the Government may be challenging the mandamus order issued by the High Court, which directed the Federal Government to carry out the constitutional review process within a specific timeframe.
The Government may argue that such matters should be resolved through negotiations between the Federal Government and the Sabah State Government rather than through judicial direction.
Another possible reason for the appeal may relate to the significant financial implications that could arise if the constitutional formula is fully implemented.
The Government may also seek clarification from the higher courts on how Articles 112C, 112D and the Tenth Schedule of the Federal Constitution should be interpreted and applied.
What Legal Arguments the Federal Government May Raise
While the detailed legal submissions will be made during the appeal proceedings, several possible arguments may be advanced by the Federal Government.
First, the Government may argue that the High Court exceeded its jurisdiction by issuing a mandamus order compelling the Government to conduct negotiations within a fixed timeline.
Second, the Government may argue that matters involving federal–state financial arrangements are inherently political and administrative in nature and therefore should not be subject to judicial enforcement.
Third, the Government may argue that Article 112D requires a review and consultation process between the Federal and State Governments, but does not automatically mandate the payment of a fixed amount without agreement between the parties.
The Likely Position of the Sabah Law Society
The Sabah Law Society, which initiated the judicial review proceedings, is expected to argue that the High Court’s decision was correct.
The Society may contend that Articles 112C, 112D and the Tenth Schedule of the Federal Constitution create binding constitutional obligations, not discretionary arrangements that can be ignored indefinitely.
If the constitutional review mechanism has not been properly implemented for decades, the courts are entitled to intervene to ensure that the Constitution is respected.
The Sabah Law Society may also argue that the failure to review Sabah’s financial entitlement under Article 112D constitutes a continuing breach of the Constitution, making judicial intervention necessary.
What the Higher Courts Will Decide
Ultimately, the appeal will require the higher courts to address several important constitutional questions:
• Whether the High Court had the authority to issue a mandamus order compelling the Government to carry out the constitutional review.
• Whether the financial safeguards contained in Articles 112C, 112D and the Tenth Schedule of the Federal Constitution are judicially enforceable.
• How Sabah’s constitutional financial entitlement should properly be implemented.
It must also be emphasised that the High Court did not create Sabah’s 40% revenue entitlement.
The entitlement already exists within the Federal Constitution itself, particularly under Articles 112C, 112D and the Tenth Schedule.
The role of the court was therefore not to create a new right, but to determine whether these constitutional provisions had been properly implemented in accordance with the Federal Constitution.
It is also important for the public to understand that an appeal does not suspend the Constitution.
The constitutional provisions relating to Sabah’s financial safeguards remain part of the supreme law of the Federation unless amended in accordance with the Federal Constitution.
A Constitutional Issue of National Importance
Sabah’s 40% revenue entitlement is not merely a financial matter.
It forms part of the constitutional safeguards that accompanied the formation of Malaysia in 1963 under the Malaysia Agreement 1963 (MA63).
It is also important to recall that Sabah agreed — though with considerable hesitation at the time — to participate in the formation of Malaysia in 1963 after receiving assurances that certain constitutional safeguards would protect the interests of the Borneo States.
The financial arrangements contained in Articles 112C, 112D and the Tenth Schedule were among the safeguards intended to ensure that Sabah would retain a fair and equitable share of the revenue generated from its own resources.
The underlying issue before the courts today is that the constitutional review mechanism provided under Article 112D appears not to have been properly implemented for many decades.
It was this prolonged inaction that eventually led to the judicial review proceedings being initiated.
Constitutional safeguards such as Sabah’s 40% revenue entitlement were never intended to remain symbolic provisions, but practical mechanisms designed to ensure that the Borneo States could develop on equitable terms within the Federation of Malaysia.
It should also be noted that the revenue in question has been collected annually by the Federal Government from economic activities within Sabah. The constitutional issue therefore is not whether the Federation can afford to honour Sabah’s entitlement, but whether the constitutional financial arrangements governing the distribution of that revenue will be implemented in accordance with the Federal Constitution.
The constitutional timeline arising from the High Court’s decision has therefore heightened public attention on whether the longstanding constitutional review under Article 112D will finally be carried out in a transparent and meaningful manner.
The courts now have the responsibility to clarify how these constitutional provisions should be interpreted and implemented.
BoPiMaFo believes that a clear and authoritative judicial interpretation will ultimately strengthen the constitutional framework governing the relationship between the Federation and the Borneo States.
BoPiMaFo also hopes that the ongoing legal process will lead to greater transparency, accountability and a fair constitutional resolution regarding Sabah’s financial rights within the Federation.
Issued in the interest of public understanding and constitutional accountability.
