Madrid Protocol of 1885



The Madrid Protocol of 1885 was an agreement between the United Kingdom, Germany, and Spain to recognize the sovereignty of Spain over the Sulu Archipelago as well as the limit of Spanish influence in the region. Under the agreement, Spain relinquished all claim to Borneo. "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'."

Another important point regarding the agreement relates to Article IV, which guarantees no restriction on trade to the parties in the protocol within Archipelago and North Borneo.

North Borneo dispute
The North Borneo dispute is the territorial dispute between Malaysia and the Philippines over much of the eastern part of the state of Sabah, a territory 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 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 having never been relinquished. However, Malaysia considers this dispute as a "non-issue" as it interprets the 1878 agreement as that of cession and that it deems that the residents of Sabah had exercised their right to self-determination when they joined to form the Malaysian federation in 1963.

Sulu heirs
Besides the Philippines, the Sabah region has also been claimed by the purported heirs of the last Sultan of Sulu. In 2019, the self-proclaimed heirs of the Sulu empire filed an arbitration appeal in Spain based on the 1878 agreement. Malaysia refused to be part of the arbitration process insisting that the proper venue to resolve the dispute was within its own legal system.

The Madrid High Court appointed Gonzalo Stampa the sole commercial arbitrator on the matter, a move which Malaysia challenged in the Civil and Criminal Chamber of the Superior Court of Justice of Madrid. The appointment was annulled, however, Stampa moved the case to the High Court of Paris. On 28 February 2022, Stampa ruled in favor of the alleged descendants of the sultan and ordered Malaysia to pay US$14.92 billion in settlement to the litigants. The award was eventually struck down by the Hague Court of Appeal on June 27, 2023.