Treaty of Labuan

The Treaty of Labuan was signed between Great Britain and the Brunei Sultanate on 18 December 1846. Under this treaty, the Sultan of Brunei ceded the island of Labuan and its adjacent islets to Great Britain.

Labuan had belonged to Brunei since the reign of the first Sultan of Brunei, Muhammad Shah. The island, previously uninhabited, was used by Malay and Chinese merchants and traders to shelter their ships from storms. Labuan was important economically for Brunei as it was regarded as the Sultanate's gateway to the outside world. Labuan was considered as a safe shelter and strategically positioned to protect Bruneian interests in the region, especially the Chinese trade route between Brunei and Manila. After the fall of Manila to the Spaniards, trading activities in Labuan increased the island's revenues as taxes increased, due to the increasing number of traders and merchants who came for water supply and most importantly, coal, which Labuan had vast reserves on the island.

Labuan attracted foreign interest due to the economic potential of the island. However, to Brunei, Labuan was their secret weapon in quelling pirates activity, especially that of the Sulus, who had once been under Bruneian rule. In 1700s, the Sultan of Brunei offered Labuan island to the British in exchange for assistance to protect Brunei from Sulu pirates. However, the offer came to nothing.

By 1800s, several foreign powers started to come to Southeast Asia, started by the Portuguese conquest of Malacca in 1511, the Spanish conquest of Manila in 1570, and the Dutch conquest of Java, Moluccas and Southern Borneo, as a result of the Anglo-Dutch Treaty of 1824, as well as the French conquest of Indochina from 1858 until 1885, Labuan became more important to the foreign powers they began to venture into Borneo from Labuan.

Following the events which affected the Brunei Sultanate in Sarawak, the British, pressured by its commercial interests, decided that it was a good opportunity for them to occupy Labuan. For the British, Labuan would be used as a port to harbour their ships. The rich coal supply in Labuan further increased British interest in the island.

The expansion of other western powers in the region caused Britain to realise the need for a permanent harbour in northwestern Borneo to prevent further foreign interference. The British worried that the Sultan might seek the assistance of other foreign powers who at that time were active in Southeast Asia, such as the Americans. Nevertheless, Labuan was considered a safe shelter and strategically situated to protect British interests in the region especially the China trade route. With the assistance of James Brooke, Britain now sought to take over Labuan.

Soon after the signing of the 1846 treaty, the British put pressure on Sultan Omar Ali Saifuddin II to cede Labuan to the British. The Sultan refused and employed delaying tactics.

However the British navy lined up British warships near the Sultan's palace with cannons ready to fire if the Sultan refused to sign the treaty. The Sultan had no choice but to put the royal seal, symbolising the surrender of Labuan Island to Great Britain as a crown colony, ceding it to the British Queen "in perpetuity", to provide British traders with a harbour where they could protect their trade interests. After the signing, James Brooke was knighted and later appointed the first British governor of Labuan.