Court of Appeal reserves decision on Putrajaya’s bid to stay 40% revenue review order

1 April 2026

KOTA KINABALU: The Court of Appeal yesterday reserved its decision on the Federal Government’s application to stay a High Court order concerning the review of Sabah’s constitutional entitlement to 40 per cent of net revenue derived from the state.

Appointed assemblyman Datuk Roger Chin said the proceedings clarified that the dispute before the court was not over Sabah’s entitlement itself, but rather the timeline and mechanism for implementing the review process.

“The issue of Sabah’s right to the 40 per cent is not being challenged. The real contention is how and when the review should be carried out,” he said in a Facebook post, summarising the hearing.

According to him, the Federal Government, as the appellant, is seeking a stay of the High Court’s order, arguing that the timeline imposed is too restrictive given the scale of financial records involved.

He said Putrajaya also maintained that the review must adhere strictly to constitutional provisions, including considerations of federal finances and prescribed procedures.

“The Federal Government further argued that if compelled to comply immediately, particularly if payments are involved, its appeal could be rendered nugatory,” he added.

However, the Sabah Law Society, acting as the first respondent, opposed the application, contending that the Federal Government had filed it in the wrong court.

Chin said the body argued that Putrajaya should have first applied to the High Court, instead of going directly to the Court of Appeal and that the issue at hand was essentially a request for more time rather than a justification for a stay.

“The Sabah Law Society stressed that granting a stay would halt the review process, which the Federal Government has already commenced and agreed to undertake.

“They also made it clear that the issue isn’t the 40 per cent itself, but ensuring the review proceeds as ordered,” he said.

The Sabah State Government, as the second respondent, largely aligned with the Sabah Law Society’s position, he added.

Among others, the state maintained that there was no real risk of the appeal being rendered nugatory, and that parties were already working towards reaching an agreement.

Chin said the state government also took the view that the High Court order does not necessarily mandate payment within 180 days, but instead requires that an agreement be reached first.

According to Roger, the court repeatedly questioned the necessity of the stay application, particularly if the dispute centred on the timeline.

“The court queried why an extension of time was not sought, why the application was not made earlier, and whether the Federal Government was challenging only the timeline or the entire review mechanism,” he said.

He added that the court also raised concerns on whether granting a stay would effectively suspend the very review process that all parties agree must proceed.

The appellate court did not deliver an immediate ruling and indicated that a decision would be made next week.