UPDATE 4-World Court rules Singapore owns strategic isle

Fri May 23, 2008 4:07pm BST

(Changes dateline, recasts with new Malaysia claim)

By Foo Yun Chee and Jalil Hamid

THE HAGUE/KUALA LUMPUR May 23 (Reuters) - The U.N.'s top court ruled on Friday that Singapore owns a rocky outcrop that lies on a strategic shipping lane in a verdict that delivered a lesser prize to fellow claimant Malaysia.

Malaysia promptly claimed ownership of another islet -- South Ledge, which the court left open depending on the territorial water it lies in -- possibly prolonging a nearly three decade-old border row between the two adjacent states.

Malaysia suffered a setback after the court awarded to its neighbour the islet of Pedra Branca, the more strategic and crucial outcrop in the cluster that lies where the Singapore Strait meets the South China Sea.

"The court concludes ... that by 1980 sovereignty over Pedra Banca/Pulau Batu Puteh had passed to Singapore," Judge Awn Shawkat Al-Khasawneh said in his ruling, which is final with no appeals allowed.

The Hague-based International Court of Justice (ICJ) also ruled that Malaysia has sovereignty of a nearby islet known as Middle Rocks.

"Since South Ledge is within the territorial waters of Middle Rocks, Malaysia appears to be the sovereign holder," Malaysian Foreign Minister Rais Yatim said in a statement.

"South Ledge is meanwhile now in Malaysian territorial waters," he said in reference to the issue of where the maritime border lies, shifting from an earlier position that the two countries would jointly study the judgment and come up with a solution regarding South Ledge.

Singapore's foreign ministry said it was not immediately aware of the Malaysian claim.

LOOSE ENDS

Singapore earlier said it was pleased with the judgment giving it sovereignty over Pedra Branca, the "key feature" of the dispute, and a minister said he did not expect any problems between the two countries.

"Malaysia and Singapore have shown through this process a good example to the rest of the region how such disputes can be resolved in a peaceful and amicable method," Singapore's Deputy Prime Minister S. Jayakumar told reporters.

The verdict does not totally resolve the dispute between the two countries because it only determines the ownership of the islets and not where the maritime boundary lies.

The outcrop is located on the edge of Singapore Strait, which together with the adjacent Malacca Strait, carries 40 percent of the world's trade. More than 60,000 ships a year traverse the waterways, carrying the bulk of oil imports for Japan and China.

Also called Pulau Batu Puteh by Malaysia, the outcrop is no larger than half a football field but houses a lighthouse run by Singapore, home of the world's busiest container port.

Singapore says the city-state has a territorial sea limit that extends up to a maximum of 12 nautical miles (22.2 kilometres).

"With this decision by the ICJ, Malaysia can from now enforce any of its sovereign rights towards Middle Rocks, including occupying the island, allowing fishing, research, weather forecasting and other activities," Malaysia's Foreign Minister Rais said earlier. "It is a win-win situation."

But in a further sign that the verdict has already struck a raw nerve, Malaysia's deputy premier Najib Razak sounded a word of caution. "The ruling does not mean Singapore can take unilateral action such as land reclamation," he told local media.

Malaysia and Singapore have a history of squabbling over issues ranging from water supplies to land reclamation and transport links since Singapore gained sovereignty from Malaysia in 1965.

The verdict could have political implications in Malaysia, where the opposition is pushing to seize power from the ruling coalition, which suffered a dismal show at the March general elections.

"It might potentially upset some of the groups that are very nationalistic in nature for whom this decision represents Malaysia's honour being slightly stripped away to Singapore," said Malaysian political analyst Tricia Yeoh.

The government had earlier warned Malaysians against holding anti-Singapore protests in the event it lost the case. (Additional reporting by Liau Y-Sing in Kuala Lumpur, Melanie Lee in Singapore; Editing by Ramthan Hussain and Bil Tarrant)