Petition for Stay of High Court Order Concerning the State’s 40% Revenue Entitlement (“Lost Years”)

12 March 2026

KOTA KINABALU: The State Attorney General’s Chambers confirms that the State Government will be opposing the application by the Federal Attorney General for a stay of the High Court Order dated 17th October 2025 concerning the review and determination of the State’s entitlement to the 40% share of net federal revenue derived from the State for the years 1974 - 2021 [“Lost Years”].

According to a statement released by Datuk Brenndon Keith Soh, State Attorney-General of Sabah, the High Court Order directed the Federal Government to hold a review with the State Government to give effect to the Federation making the 40% special grant entitlement

within the constitutional framework for the Lost Year's. This was to reach an agreement within a prescribed timeline of 180 days, namely by 15th April 2026.

Since the delivery of the judgment, the State Government has remained resolutely committed to complying with both the letter and the spirit of the High Court’s decision, he stated.

The State has consistently participated in the engagement process with the relevant federal

authorities and several meetings and technical discussions have been convened to facilitate the exchange of information, verification of data, and consideration of possible methodologies for determining the quantum of the 40% special grant entitlement.

The State has approached these discussions constructively, transparently and in good faith, with the objective of achieving a fair, principled and mutually acceptable resolution within the timeframe set by the Court.

"In this regard, the State has also put forward proposals and working frameworks to assist the parties in progressing towards an agreement."

"It is therefore the State Government’s considered position that there has been no delay or lack of cooperation on the part of the State in the implementation of the High Court Order."

On the contrary, the State has taken active and continuous steps to ensure that the courtmandated process proceeds in an orderly and productive manner.

The State Government therefore remains ready, willing and able to continue engaging with the Federal Government in a constructive manner with a view to reaching a mutually agreed outcome consistent with the constitutional provisions governing the special grant and the terms of the High Court’s Order.

In this regard, it should also be reiterated that Article 112D(6) of the Federal Constitution provides a clear constitutional mechanism should the parties ultimately be unable to reach agreement.

The provision necessitates the appointment of an independent assessor, whose recommendations on the matter “shall be binding on the governments concerned and shall be given effect as if they were the agreements of those governments.”

This constitutional safeguard ensures that the review process contemplated under the Federal Constitution can be concluded in an orderly manner even in the absence of a mutually agreed settlement.

In light of the ongoing discussions and the approaching timeline stipulated by the Court, the State Government is of the view that both parties should continue to focus and intensify efforts on fulfilling the terms of the High Court Order and working collaboratively towards an equitable resolution within the prescribed timeframe.

"The State Attorney General’s Chambers will always take the necessary legal steps to safeguard the rights and interests of the State, while supporting a process that is consistent with the rule of law, constitutional principles and cooperative engagement between the Federal and State Governments."