Court of Appeal grants stay to Putrajaya over Sabah 40pc revenue ruling

KUALA LUMPUR, April 6 — The Court of Appeal in Putrajaya has granted the federal government a stay of execution on a High Court order tied to Sabah’s long-contested 40 per cent share of net federal revenue, pausing both negotiations and any payment deadlines while Putrajaya pursues its appeal.

Delivering the ruling, as reported by FMT, judge Mohamed Zaini Mazlan said the government would “clearly be prejudiced” if compelled to comply before its appeal is heard, particularly given the scale and timing of the obligations imposed.

“We also note that the court’s order not only directs negotiations, but also requires payment from the federal consolidated fund within 180 days of the High Court’s order,” he said.

Zaini warned that rejecting the stay could carry wider fiscal risks. 

“There would be serious financial consequences for public funds if the application for a stay was rejected pending the appeal,” he added, noting that “the imposed timelines may not give the parties sufficient opportunity to determine the correct quantum payable.”

Judges Datuk Ismail Brahim and K. Muniandy sat on the panel. No order was made as to costs.

The dispute stems from a High Court ruling last year, in a judicial review brought by the Sabah Law Society (SLS), which found the federal government had breached its constitutional duty by failing to review and pay Sabah its 40 per cent share of net revenue for the “lost years” from 1974 to 2021.

The High Court said no such reviews were conducted until 2022 and directed Putrajaya to work with the Sabah government to determine the amount owed. It set a three-month window for a review and a further six months — from October 17, 2025 — to reach an agreement, effectively fixing a mid-April deadline this year.

With the stay now in place, those timelines are suspended pending the outcome of the appeal.

Senior federal counsel Ahmad Hanir Hambaly appeared for the government. 

The SLS was represented by David Fung and Jeyan Marimuttu, while Sabah was represented by state Attorney General Datuk Brenndon Keith Soh.