JUDGMENT

Celestina Stuel Galid J:

Introduction

[1] On 17 October 2025, this court granted the application for judicial review filed by Sabah Law Society ("SLS") under O 53 of the Rules of 2012 ("ROC 2012").

[2] This judgment contains this court's reasoning in coming to its decision and is divided into the following sub-topics:

(i) The proceedings at the leave stage;

(ii) Salient background facts;

(iii) What is the 40% Entitlement?;

(iv) The remedies and orders prayed for by SLS;

(v) The respective parties' cases in a nutshell;

(vi) Preliminary issues;

(vii) This court's decision on the merits (of the application); and

(viii) Conclusion and orders.

The Proceedings At The Leave Stage

[3] SLS' leave application (to commence the judicial review) was opposed by the Federal Attorney-General with the 2nd Respondent being allowed to intervene. Leave was granted by Ismail Brahim J (later JCA) on 11 November 2022 — see Sabah Law Society v. The Government Of The Federation Of Malaysia & Anor; [2024] 7 MLJ 537; [2023] 10 CLJ 121.

[4] The grant of leave was appealed against by the 1st Respondent to the court of Appeal — see Attorney General Of Malaysia v. Sabah Law Society; State Government Of Sabah (Intervener); [2024] 4 MLJ 436; [2024] 7 CLJ 691. The appeal was dismissed on 18 June 2024.

[5] The 1st Respondent's leave application to appeal to the Federal court against the court of Appeal's decision was dismissed on 17 October 2024 — see Attorney General Of Malaysia v. Sabah Law Society; [2024] 6 MLJ 121; [2025] 1 CLJ 1; [2024] 8 AMR 673.

Salient Background Facts

[6] SLS is an entity established under Sabah Advocates Ordinance (Sabah Cap 2). Although its standing to bring the present judicial review was challenged by the 1st Respondent, this issue has been put to rest by the Federal court which held that SLS has threshold locus standi to do so — see Attorney General of Malaysia v. Sabah Law Society.

[7] The 1st Respondent is the Federal Government while the 2nd Respondent is the State Government of Sabah. They will be interchangeably referred to herein as the 1st Respondent/the Federal Government and the 2nd Respondent/the State Government.

[8] By a Federal Government Gazette publication PU(A) 119/2022 dated 20 April 2022, the Federal Government published the Order "The Federal Constitution [Review of Special Grant Under art 112D] [State of Sabah] Order 2022 ("the Second Review Order")" which states the following:

"Special grant

2. For a period of five years with effect from 1 January 2022, the Government of the Federation shall make to the State of Sabah, in respect of the financial year 2022, 2023, 2024, 2025 and 2026, grants in the sum of RM125.6 million, RM129.7 million, RM133.8 million, RM138.1 million and RM142.6 million respectively.

Revocation

3. The Sabah Special Grant (First Review) Order 1970 [PU(A) 328/1970] is revoked."

[9] It was in respect of the Second Review Order that this judicial review was applied for. SLS contended that the Second Review Order failed to comply with art 112C of the Federal Constitution ("FC"), read with subsection (1) of s 2 of Part IV of the Tenth Schedule and Clauses (1), (3) and (4) of art 112D.

[10] As a matter of additional background, Sabah Special Grant (First Review) Order 1970 ("the First Review Order") under art 112D was made on 18 August 1970. By the First Review Order, the Federal Government and Sabah Government agreed that instead of the grant specified in sub-section (1) of s 2 of Part IV of the Tenth Schedule to the FC, another grant be made for the period of five years as follows:

(i) 1969 — RM20 million

(ii) 1970 — RM21.5 million

(iii) 1971 — RM23.1 million

(iv) 1972 — RM24.8 million

(v) 1973 — RM26.7 million

[11] The period for the grant was from 1 January 1969 to 1 January 1974. Thereafter, the next review order would be the Second Review Order in 2022.

[12] In addition (and after the filing of this judicial review application), a Federal Government Gazette publication PU(A) 364/2023 dated 24 December 2023 was iss