Penang-Kedah payment issue hinges on constitutional interpretation

A long-standing dispute over Penang's historical status and its financial obligations to Kedah remains a contentious issue, often entangled in emotional and regional politics. At the heart of the debate is the interpretation of the Federal Constitution, particularly concerning the transfer of property rights and sovereignty.

Proponents of the current geographical status quo often cite Article 166 of the Federal Constitution, arguing that all British property and sovereignty were absolutely transferred to the new state of Penang on August 31, 1957. However, a deeper legal analysis of relevant documents reveals significant legal gaps in this narrative of "absolute surrender."

Legal scholars argue that Article 166 cannot be interpreted in isolation. It must be read in harmony with Article 167(7), Clause 5 of the 1957 Federation of Malaya Agreement, the Fourth Schedule of the Agreement, the 1869 Anglo-Siamese Treaty, and a series of reservation documents from the drafting of the Federal Constitution. This chain of documents, they contend, indicates that the Federal Government is in continuous constitutional default for failing to promptly conclude annual payment negotiations with the Kedah government under Article 167(7) and a proper deed of relinquishment.

The Fourth Schedule and Article 167(7) of Article 166 originated from the Reid Commission's proposals, which were initially under Article 161. The Reid Commission did not consider the Kedah Sultanate's claims over Penang as part of its terms of reference. The constitutional committee in 1957 later negotiated Penang's status, specifically incorporating provisions related to the British Crown's rights and obligations under the 1869 Treaty into the Fourth Schedule of the 1957 Federation of Malaya Agreement. This schedule details how the British Crown relinquished responsibility for Penang, including Seberang Perai, and stipulated the release of British obligations under Articles II and III of the 1869 Treaty, which mandated annual payments to Kedah as per Article 167(7) of the Federal Constitution.