There is not a day that goes by without breaking news on escalating tensions in the South China Sea, as regional powers like Vietnam, the Philippines and Malaysia increasingly contest China’s efforts to exert dominance of the strategic waterway through which moves a fifth of global trade. Yet beneath these rising tensions, the spectre of European colonialism lurks undetected.

The unexpected link between present day tensions and past misdemeanors comes through a seemingly obscure international legal dispute which last February resulted in an award of nearly $15 billion against the government of Malaysia, on behalf of nine heirs to a colonial-era Sultanate in the Sulu region of the Philippines.

The award is not only the second largest of its kind in the history of international legal arbitrations, it may also be linked to current geopolitical tensions in the region in surprising ways. According to former NATO analyst Maurizio Geri, the lawyers for the Sulu heirs are closely tied to US tech giants competing with China to dominate subsea cabling routes through which pass the world’s internet data.

Geri claims that apart from traditional trade routes, control of the global internet is the real prize at stake in the South China Sea. Indeed, in early May, US and EU officials wrote urgently to Malaysia citing risks to national security and foreign investment due to a Malaysian government review which could gift China’s Huawei a major role in building Malaysia’s 5G network.

He argues that with the Sulu heirs’ case being financed by unidentified Western investors through the third-party litigation funding firm Therium Capital, it might well exacerbate Malaysian perceptions of Western hostility to Malaysia’s national interests.

But the case itself is based on flawed misreadings of the history of Spanish and British colonialism in the region. The Sulu heirs rest their case on an 1878 colonial-era land deal in which the sultan leased his territory in the Sabah region of present-day Malaysia to two British colonists for the sum of around $1,000 a year. Malaysia paid the fee until an armed invasion of Sabah by followers of the Sulu heirs in 2013, which resulted in 71 people killed.

The decision of the arbitrator in the Sulu heirs’ case is premised on the assumption that the 1878 treaty between the Sultan of Sulu and two British colonialists, Alfred Dent and Baron de Overbeck, is the historic legal foundation of modern Malaysia’s sovereignty over the North Borneo region containing what is today known as Sabah.

That’s just false. British colonial records reviewed by several specialist historians show that the Sultan of Sulu did not in fact have ownership or control over the lands of North Borneo in the first place – it was the Sultan of Brunei which had much wider control. Which means that the Sultanate was not in a position to handover any rights to the British.

In fact, the British were fully aware of this when they signed the treaty with the Sultan of Sulu, which they had done as an afterthought just to make sure that they had done whatever was necessary to appease the natives.

Observers have noted that the international consequences of this award could be seismic. The case sets a major precedent that undermines the sovereign immunity of states, especially those based in former colonial territories. And if an entire province of a state can be up for grabs as part of a ‘commercial lease transaction’ thanks to colonial transactions over a century ago, this could spark similar challenges to state sovereignty in major land disputes.

But perhaps the bigger risk is that the case could drive a wedge between Malaysia and the Philippines exactly when the US needs potential allies in the region to provide a force of unity against Chinese encroachment.

The views expressed in this article belong to the authors alone and do not necessarily reflect those of Geopoliticalmonitor.com.