Published October 16, 2008
M'sian court orders ruler to pay Stanchart US$1m
Landmark ruling seen as guide to future cases involving royalty
By PAULINE NG IN KUALA LUMPUR

Email this article

Print article

Feedback
IN a landmark decision seen as a guide to future cases involving royalty, a Malaysian Special Court has ordered the ruler of Negeri Sembilan, Tuanku Ja'afar Tuanku Abdul Rahman, to honour a prior business commitment and pay Standard Chartered Malaysia (SCM) US$1 million.
The five judges of the court, which was specially set up to hear cases involving royalty, yesterday unanimously allowed the bank's suit against the former Malaysian king, and dismissed the latter's counter-suit for a declaration that the bank was not entitled in law to offset a fixed deposit with the bank to settle the amount.
The first 'post-1993' case against a serving sultan has enormous significance in that it would encourage more people who have suffered grievances to go to court and at the same time ensure the royals are more cautious in their dealings, said Professor of Law at UiTM, Shad Saleem Faruqi, who thought that the decision was not totally unexpected given the 1993 amendments to the Federal Constitution.
As a constitutional monarchy, the King is elected by his peers with the crown rotated every five years among the nine rulers of the Malay states. Before 1993, the Federal Constitution conferred on state rulers absolute immunity from civil or criminal proceedings, but this was abolished in 1993 when former prime minister Mahathir Mohamad succeeded in pushing for amendments to the constitution.
0 ? blnMac = true:blnMac = false;
if (blnMac == true) {
document.write('');
}
//-->

language='JavaScript1.1'
src='http://ads.asia1.com.sg/js.ng/Params.richmedia=yes&site=tbto&sec=btointhenews&cat1=bnews&cat2=btointhenewsart&size=300X250'>
A point to note is that the SCM case is the first post-1993 case against a serving state ruler that had gone to full trial. In 1996, an attempt by a Singaporean national was nipped in the bud owing to a technicality. The case - the first ever heard by the Special Court - Faridah Begum's suit against the Pahang ruler Sultan Haji Ahmad Shah for defamation was dismissed on the grounds she did not have the legal standing as only citizens have the right to sue a ruler.
Tuanku Ja'afar, 86, was the 10th Malaysian King, reigning from 1994 to 1999 - and according to reports, in the last year of his rule, he was involved in a business transaction that became the issue in the 2005 suit filed by SCM.
The then King had established through SCM a stand-by letter of credit of US$1 million in favour of US-based Connecticut Bank of Commerce for credit facilities to be extended by CBOC to Texas Encore LLC, a US firm primarily involved in the production of 'activated tyre rubber'. The monies were to be used to establish and operate a factory in Detroit.
SCM said in its statement of claim that Tuanku Ja'afar had undertaken to indemnify the bank against all losses arising from the issuance of the credit but had failed to do so.
Although the Federal and state constitutions prohibit rulers from participating in business activities, a few have ignored the prohibitions. 'The Special Court ruling is a warning that if you indulge in trade and commerce, you can be taken to court if you don't observe your obligations,' Prof Shad said.