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Malaysia vows to fight move by sultan's heirs to seize Dutch assets

By A. Ananthalakshmi and Rozanna Latiff

KUALA LUMPUR (Reuters) -Malaysia said on Friday it will challenge a move by the heirs of a Southeast Asian sultan to seize its Dutch assets as part of the descendents' efforts to enforce a $15 billion arbitration award against the Malaysian state.

The heirs of the former Sulu sultan on Thursday asked a Dutch court for permission to seize Malaysian assets in the Netherlands, where some of Malaysia's biggest companies have operations - including state oil firm Petronas.

The heirs are targeting Malaysian assets overseas following the government's refusal to recognise the $15 billion arbitration award by a French court in February, which found Malaysia had reneged on an 1878 land leasing agreement.

The deal was signed between two European colonists and the sultan for the use of his territory, some of which was later incorprated into modern-day Malaysia.

Malaysia honoured that deal until 2013, paying the monarch's descendants about $1,000 a year. But Kuala Lumpur stopped the payments after a bloody incursion by supporters of the former sultanate who wanted to reclaim land.

In the current dispute, Malaysia has said it does not recognise the heirs' claim and that the arbitration, in which it did not participate, was illegal.

Malaysia obtained a stay on the ruling pending an appeal, but the award remains enforceable outside France under a United Nations treaty on international arbitration.

"Malaysia will spare no expense in defending its sovereignty and its assets abroad wherever they may be situated," law minister Wan Junaidi Tuanku Jaafar said in a statement.

He said Malaysia would take legal action in the Netherlands to "resist and set aside" any attempt to seize assets, and that the country has initiated a global strategy to proactively challenge other possible seizure bids.

Wan Junaidi also said Petronas' assets were not assets of the government of Malaysia.

"It would be an abuse of the process of any court to seek enforcement against such assets," he said.

The Malaysian government is the sole shareholder of Petronas and collects an annual dividend from the oil firm.

Petronas did not have an immediate comment on the government statement. It has not commented on the heirs' court petition in the Netherlands.

A spokesperson for the heirs told Reuters they were surprised by Wan Junaidi's statement on Petronas' assets.

"Given the Malaysian government claims to no longer own Petronas, I imagine Malaysians would be curious as to who currently does," the spokesperson said.

In July, two Luxembourg-based subsidiaries of Petronas were seized by court bailiffs as part of the heirs' effort to claim the award.

Petronas has described the Luxembourg seizure as "baseless" and vowed to defends its global assets.

(Reporting by A. Ananthalakshmi, Rozanna Latiff; Editing by Martin Petty, Ed Davies and Andrew Heavens)