Manila: The Philippines’ long-standing but dormant claim to the northern Borneo state of Sabah has been a thorny issue in its relations with Malaysia, and has resulted in the severing of diplomatic ties in the past.

The territorial dispute is behind the violent standoff in the village of Lahad Datu, 1,600 kilometres east of Kuala Lumpur, where about 200 Filipinos set up camp February 12 to assert their ancestral rights.

The men call themselves the royal army of the Sulu sultanate, a group of Philippine islands. Their claim to Sabah dates to 1704, when the sultan of Brunei ceded the region to Sulu’s sultan as a token of gratitude for helping quell a rebellion in Brunei.

In 1878, the sultan’s family entered into a contract for Sabah with agents of the British North Borneo Co, which passed on the agreement to Malaysia when it was given independence in 1957.

International law experts said the dispute arises from English and Malaysian authorities regarding the agreement as a contract of sale, while the sultan and the Philippines government considered it to be a lease contract.

Kuala Lumpur still pays the sultan 5,300 ringgit (1,680 dollars) per year in rent for Sabah, home to one of the world’s top dive sites, beautiful beaches and lush forests.

“It’s a small amount, but they clearly recognise our rights over Sabah,” said Sultan Jamalul Kiram III, whose brother Rajah Muda Agbimuddin Kiram is leading the armed men on Sabah.

The sultan insisted that money is not an issue, but the family had demanded a renegotiation of the original terms of the Sabah lease, including increased payments.

They also insisted on joint development of Sabah and royalties of 50 per cent of the proceeds from the state’s economic growth.

“That is our homeland,” he said in Manila. “We want to peacefully live there, build homes and find livelihood.”

The territorial dispute over Sabah, which lies south of the Philippines’ southern region of Mindanao and is home to 800,000 Filipinos, resulted in year-long suspensions of diplomatic relations between Manila and Kuala Lumpur in 1963 and 1968.

In 1977, then-Philippine president Ferdinand Marcos told the Association of South-East Asian Nations that the Philippines was “taking definite steps to eliminate one of the burdens of Asean — the Philippine claim to Sabah.”

Harry Roque, director of the University of the Philippines’ Institute of International Legal Studies, said Malaysia believed Marcos unequivocally abandoned Manila’s claim to Sabah with that statement.

Since then, the issue had been “relegated to the back burner,” given the importance of bilateral relations and Malaysia’s role as facilitator in peace talks with Muslim rebels in Mindanao, he said.