Sabah Wins Landmark Case on 40 per cent Special Grant

The Kota Kinabalu High Court ruled on 17 October 2025 that the Sabah Law Society (SLS) can proceed with its application for a judicial review regarding Sabah's right to the 40 per cent special grant from the Federal Government. Judge Datuk Celestina Stuel Galid instructed the Federal and State governments to reach a mutual agreement within 180 days from the date of the order as required under Article 112D of the Federal Constitution. The Court placed strong emphasis on the text of the Constitution (notably Articles 112C/112D) and on the binding nature of the founding agreement (the Malaysia Agreement 1963). The court’s ruling is mandamus with specific timetables: a review within 90 days, and a binding agreement within 180 days covering the period from 1974–2021. Chief Minister Datuk Seri Panglima Haji Hajiji Haji Noor said that the court decision is a victory for Sabah.

"We are relieved with the High Court's decision which ordered the Federal Government to conduct another review - within 90 days - on the grant for the lost years. It confirmed Sabah's right as stipulated in the Federal Constitution, particularly under Article 112C and 112D. The recent acceptance of the interim payments by Sabah was without prejudice to the State's constitutional rights,” said Hajiji.

The judgment on 17 October 2025 held that the special grant mechanism used by the federal government was “ultra vires” under the constitutional scheme. The court also said that decades of inaction (“the lost years”) cannot simply be ignored under constitutional duty. In the ruling on Sabah’s 40 % revenue entitlement, the court sees the constitutional provisions as mandatory, not discretionary. The decision emphasized federal-state fairness, institutional accountability, and the rule of law over purely political considerations.

"With the court decision, we will engage with the Federal Government to fulfil its responsibilities as agreed upon during the formation of Malaysia and to implement the Court’s orders in respect to Sabah’s constitutional rights,” Hajiji said. “We have fought for this issue relentlessly through every formal channel, every MA63 meeting chaired by the Prime Minister, and through countless official letters sent to Putrajaya. Not once have we allowed this matter to pause.”