High Court judge Celestina Stuel Galid also declared the special grant arrangements made by both the federal and state governments “unlawful, ultra vires and irrational”, Malaysiakini reported.

She added that the grant arrangement had also breached the Federal Constitution.

“It is unlawful on the part of the federation to make the intended special grants under the 10th Schedule,” she was quoted as saying.

Celestina also ruled that the Second and Third Review Orders issued by the two governments were invalid and allowed the Sabah Law Society’s (SLS) application in full.

The SLS filed for a judicial review in 2022, claiming that the federal government had breached the Federal Constitution by failing to conduct a mandatory revenue review every five years since 1974.

It also argued that the government is constitutionally obliged to remit 40% of federal revenue collected from Sabah back to the state for each of those years.

The revenue-sharing formula has been a contentious issue for decades. Sabah politicians have called for the federal government to honour the state’s entitlement, as agreed in 1963, to 40% of the net revenue derived from Sabah.

Use of the formula had been suspended since 1974, with the federal government paying increased special grants to Sabah and Sarawak instead.

Former Sabah chief minister Yong Teck Lee, who was at the High Court, described the decision as a “big day for Sabah”.

“It is a victory for Sabah,” he added.