Ah, the famous Blocks L and M, or Blocks J and K, if you are a Bruneian (see map above). Ever since the news came up, many people have been particularly vociferous about the issue. Some actually called for the former Prime Minister to be tried for treason for “surrendering national territory” while others have called it “unconstitutional because [it is] an act of ceding territory of a State (of Sabah)”, and questioned why the Sabah State Government was not asked its permission. Serious allegations indeed.
The reality is, before the Exchange of Letters and agreement as was executed by the former PM, Malaysia was standing on rather flimsy grounds as far as international laws apply when Malaysia claimed the disputed areas as its Exclusive Economic Zone (EEZ). The relevant law is UNCLOS (United Nations Convention on the Law of the Sea, 1982) which was both ratified by Brunei and Malaysia, and came into force as international law in 1994. (Download full text of UNCLOS 1982, and see the history of the EEZ as a legal regime here.)
I quote Article 56 of UNCLOS, which covered the rights, jurisdiction and duties of the coastal State in the EEZ:
In the exclusive economic zone, the coastal State has: (a)sovereign rights for the purpose of exploring and exploiting, conserving and managing the natural resources, whether living or non-living, of the waters superjacent to the seabed and of the seabed and its subsoil, and with regard to other activities for the economic exploitation and exploration of the zone, such as the production of energy from the water, currents and winds…
As you can see, a nation, in claiming an EEZ, has only certain rights (certainly, these rights cover subsea minerals, including oil and gas) and are far more limited as opposed to what it can exercise on land or within its 12-nautical miles territorial seas. Also, under UNCLOS, a country can claim an EEZ that starts at the seaward edge of its territorial sea and extends outward to a distance of 200 nautical miles from the baseline. The coastal nation also have rights to the seabed of the continental shelf up to 350 nautical miles from the coastal baseline, where this extends beyond the EEZ. The exception to this rule occurs when EEZs would overlap; that is, national coastal baselines are less than 400 nautical miles apart. When an overlap occurs, it is up to the states to delineate the actual boundary.
As you can see from the map above, certainly Brunei has every right under UNCLOS to claim its EEZ. In fact, I am surprised that the Bruneians even deigned to throw a gratuitous bone to Malaysia in granting joint-exploration rights for 40 years in the two blocks.
Finally, let us talk about “Sabah’s” oil. Beyond 3 nautical miles of the Sabah shore, any subsea minerals, be it oil, gas or others, is not Sabah (as a state entity) to own. Let me explain: (and you lawyers knowledgeable in Federal-State laws probably know this a lot more) The limit of state waters, under Malaysian Laws, only goes to the 3 nautical miles seaward; anything further is under Federal Jurisdiction—fisheries, mining, navigation, land, environment, etc. (That is why Pulau Layang-Layang is a federal territory, and why the Sabah Government do not issue land titles or TOL in these far areas.) The Sabah Planning Bill, if I am not mistaken, only covers Sabah’s 3-nautical-miles waters, and which extends a bit more in the West Coast—the sea areas between Kota Kinabalu to Kota Belud, and the two islands, Mantanani and Megalum. So, at least in legal terms, Sabah is on shaky foundations to sue for “its” oil and gas.