Court of Appeal grants stay in Sabah 40 pct revenue entitlement case

KOTA KINABALU (April 6): The Court of Appeal in Putrajaya has allowed a stay application in relation to the Sabah’s 40 per cent revenue entitlement case.

Sabah Law Society (SLS) president Datuk Mohamed Nazim Maduarin in a statement said that the application was pursuant to Section 44 of the Courts of Judicature Act 1964.

“The Court held that it had jurisdiction to entertain the application under Section 44, notwithstanding the procedural objection raised, and that there were special circumstances warranting a stay pending disposal of the appeal,” he said.

He explained that in reaching its decision, the Court considered that the timelines imposed by the High Court, requiring a review within 90 days and an agreement within 180 days, may not afford sufficient opportunity for the proper determination of the quantum payable, particularly having regard to the scope of the review exercise spanning multiple financial years from 1974 to 2021.

Mohammed Nazim further said that the Court took the view that enforcing payments of such magnitude prior to the disposal of the appeal could result in a ‘fait accompli’, thereby rendering the appeal nugatory and undermining the integrity of the appellate process.

“The court also noted the indication by the applicant that steps are being taken to expedite the hearing of the appeal.

“The effect of the order is to preserve the position pending the disposal of the appeal, it does not displace the findings of the High Court, including its determination that there had been a failure to conduct the periodic review required under Article 112D of the Federal Constitution,” said Mohamed Nazim.

SLS emphasised that the decision is procedural in nature, and that substantive constitutional issues, including the interpretation and proper implementation of Article 112D of the Federal Constitution, remain to be determined in the appeal.

On Oct 17, 2025, SLS succeeded in its judicial review, with the Kota Kinabalu High Court ruled that the federal government acted unlawfully and beyond its constitutional powers when it failed to fulfil Sabah’s rights to 40 per cent of federal revenue for the years 1974 to 2021.

The decision was delivered by Judge Datuk Celestina Stuel Galid, who described the special grant made between the federal government and the Sabah government as “invalid, ultra vires and irrational” and in breach of the Federal Constitution.

The court also issued a mandamus order directing the federal government to conduct a revenue review with the Sabah government under Article 112D of the Federal Constitution to reinstate Sabah’s right to 40 per cent revenue for each financial year from 1974 to 2021.

The order required the review to be carried out within 90 days, while a mutual agreement between the two governments must be reached within 180 days from the date the order was issued (Oct 17, 2025).