KUALA LUMPUR – The Kota Kinabalu High Court has ruled that the federal government acted unlawfully and beyond its constitutional powers by failing to honour Sabah’s 40% entitlement to federal revenue for nearly five decades.
Judge Celestina Stuel Galid declared that the special-grant review orders jointly issued by Putrajaya and the Sabah government were “unlawful, ultra vires and irrational”, effectively breaching the Federal Constitution, according to Borneo Post Online.
“It is unlawful on the part of the federation to make the intended special grants under the 10th Schedule,” she said when delivering her judgment in open court on Friday.
The court found that both the Second and Third Review Orders were invalid and allowed the Sabah Law Society’s (SLS) application in full.
A mandamus order was issued directing the federal government to conduct a fresh revenue review with the Sabah government under Article 112D of the Constitution.
The review must determine the state’s 40% entitlement for each financial year from 1974 to 2021, to begin within 90 days and be completed within 180 days.
The court also accepted SLS’s request to include a Fourth Review Order — gazetted on August 27, 2025 — noting that it had the same effect as earlier orders and should be recognised for completeness in the final certiorari order.
No order was made as to costs.
SLS was represented by counsels David Fung, Jeyan Marimuttu, and Janice Junie Lim. The federal government was represented by senior federal counsel Ahmad Hanir Hambaly @ Arwi, Nur Atirah Aiman Rahim, and Solehheen Zaki, while the Sabah Attorney-General’s Chambers, led by Brenndon Keith Soh, appeared for the state government.
Federal counsel later informed the court that Putrajaya would file a formal application for a stay pending further instructions. — October 17, 2025