KUALA LUMPUR: The Attorney-General’s Chambers’ (A-GC) decision not to appeal the High Court ruling granting Sabah 40 per cent of federal revenue is a significant legal concession with potential implications for federal-state relations across Malaysia.
Constitutional lawyer Joshua Wu said the move signals that Sabah’s constitutional rights under Articles 112C and 112D of the Federal Constitution are enforceable and sets a benchmark for other states.
“The federal government’s decision not to appeal the entitlement on 40 per cent of revenue indicates that Sabah’s claims are due and payable for each financial year from 1974 to 2021.
“It also shows that the 40 per cent entitlement is unlikely to be reversed on appeal, as it is excluded from the federal government’s grounds for challenge,” he told the New Straits Times.
The Kota Kinabalu High Court on Oct 17 ruled that while the 40 per cent entitlement can be reviewed under Article 112D, Sabah has a constitutional right to the allocation under Article 112C.
By appealing only certain aspects of the judgment, the federal government is effectively recognising the validity of Sabah’s claims while challenging procedural points in the court’s reasoning.
Wu said the government’s selective appeal could set a precedent for other states, such as Sarawak, to assert their constitutional rights.
“An interested party might be keen to bring this matter before the courts on behalf of Sarawak, having seen the Sabah Law Society’s success and the federal government’s decision not to appeal against the 40 per cent entitlement.
“It is worth noting, however, that being a decision of the High Court, the ruling is persuasive but not binding on other High Courts.”
He said the ruling reinforces the legal enforceability of constitutional obligations between the Federation and the states, and promotes a more balanced distribution of power within Malaysia’s federal system.
“This is a clear example of how states can assert their constitutional rights, and it may influence future federal-state negotiations on revenue and other entitlements.”
Meanwhile, former Malaysian Bar Council president Datuk Salim Bashir described the decision as an important affirmation of Malaysia’s constitutional commitments and the federal government’s responsibility under the Malaysia Agreement 1963 (MA63).
He said the decision signifies that the federal government acknowledges and respects its obligations to render the payments under the Federal Constitution from 1974 to 2021.
“This is a correct decision to safeguard Sabah’s rights under the MA63, and reconciling the 40 per cent special grant with the Constitution is crucial to uphold the rule of law and recapture the spirit of MA63,” he said.
Salim said the government’s move sends a strong and symbolic message to the people of Sabah and Sarawak that the principles enshrined under MA63 are not merely political rhetoric but legally binding commitments that form the foundation of Malaysia’s federal structure.
“The move also shows that MA63 is not a mere promise but a binding constitutional instrument that must be honoured.
“The decision not to appeal the revenue entitlement suggests that the federal government wishes to uphold its constitutional obligations towards the State of Sabah,” he said.
The federal government had previously clarified that it would appeal certain alleged flaws in the High Court’s reasoning but would not challenge Sabah’s 40 per cent entitlement.
The 40 per cent revenue entitlement forms part of the safeguards under the Malaysia Agreement 1963 (MA63), aimed at ensuring fair revenue distribution from taxes and resources collected by the federal government in Sabah.
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