Sabah Preparing for Talks with Putrajaya to Honour Court’s Judgement on 40% Special Grant

Chief Minister Datuk Seri Panglima Haji Hajiji Haji Noor met with the Sabah Law Society (SLS) on 26 November 2025 to continue discussion on Sabah’s framework in the ongoing engagement with the Federal Government pertaining to the constitutional rights of the 40 per cent special grant from the Federal Government. In a landmark decision in October 2025, the High Court of Kota Kinabalu ruled in favour of plaintiff, the SLS, on the 40 per cent Special Grant.

Hajiji said that SLS will submit a detailed input which will be presented to the State Attorney-General and the State Finance Ministry to consolidate Sabah’s case. Sabah is awaiting response from the Federal Government to honour the High Court judgment which has mandated that the Federal Government holds discussions with the State Government within 90 days from the judgement day, 17 October 2025 and thereafter, to execute a binding agreement within 180 days - to deal with the 40% special grant covering the “lost years” period from 1974–2021.

In the historic decision in October 2025, the Court said that the Federal Constitution (notably Articles 112C/112D) has clearly stipulated the binding nature of the founding agreement (the Malaysia Agreement 1963) in which Sabah agreed to join Malaya to establish a new nation, Malaysia.

In October 2025, following the court’s judgement, Hajiji has said that Sabahans are relieved with the court's decision because it confirmed Sabah's right as stipulated in the Federal Constitution. "With the court decision, we will engage with the Federal Government to fulfil its responsibilities as agreed upon during the formation of Malaysia in 1963 and to implement the Court’s orders in respect to Sabah’s constitutional rights,” Hajiji has said in October 2025.

In the judgement, on 17 October 2025, the court has also held that the special grant mechanism that has been used in the past by the federal government was “ultra vires” under the constitutional scheme and that the decades of inaction (“the lost years”) cannot simply be ignored under constitutional duty. The court sees the 40 % revenue entitlement which is enshrined in the Constitution as mandatory, and not discretionary.

On another matter during the discussion with SLS on the same day, 26 November 2025, Hajiji said that the SLS will be included in the State’s team which is presently formulating the Sabah Sovereign Wealth Fund (SSWF) framework. The establishment of Sabah's first sovereign wealth fund, on 17 November 2025, a core pledge under the GRS election manifesto, aims to raise the State’s annual revenue to RM10 billion by 2030. The Initial capital for the SSWF will be drawn from a portion of Sabah’s state reserves, ensuring long-term financial stability. A fixed percentage from the 40 per cent special grant from Putrajaya will also be channelled into the fund annually. The SSWF team will include government officials and professionals from the investment, finance, and law industry.