The Portuguese and the Spaniards, in search of spice, were the earliest among the westerners to arrive in the East Indies and establish themselves in Malacca early in the 16th century. British interest in the Sulu-Borneo area stemmed primarily from the East Indian Company’s desire to establish a factory. The head of this particular project was Alexander Dalrymple, who, in January 1761, negotiated a Treaty of Friendship and Commerce with the Sultan of Sulu. The agreement was confirmed by another treaty in February 1763 reiterating the major provision, emphasizing defense alliance.
But the company appeared unable to take advantage of this concession. When it finally decided, in 1769, to occupy Balambangan and made use of the ceded territory, disease and strained relations with the Sultan of Sulu erupted that led to open war; hence, prevented the development of the enterprise. The Balambanagn settlement was abandoned in 1775 until a second attempt was made in 1803, which again abandoned in 1805.
Under the Act of 1858, the East Indian Company was dissolved and their interests were transferred to the crown. However, evidence seems to suggest that the territires ceded by the Sulu failed to interest the British government further. Lord Canning, as the first viceroy to British India, repudiated the “doctrine of lapse” and was further enunciated by his predecessor (the Earl of Derby). The Earl of Derby, in explaining to the British Ambassador in Germany the nature of Spanish claim to North Borneo:
“It should be mentioned that previously to 1836 Spain claimed the island on the ground of first discovery, ancient treaties, and alleged occupations; but those claims were never admitted by Great Britain…Great Britain also had rights under Treaties with Sulu, dated 1761, 1764, and 1769, BUT those treaties must be considered as having lapse…” (Emphasis provided)
Almost two decade before the dissolution of the East Indian Company, an Englishman named James Brooke visited Sarawak, and shortly after was offered by the Sultan of Brunei the governorship of Sarawak in exchange for aid in the face of continuing rebellion. Later in 1841, Brooke was proclaimed Rajah and in subsequent years, he succeeded in minimizing piracy in Sarawak, brunei, and North Borneo with the cooperation of the British Navy. The involvement of Brooke made him “the supreme ruler of Sarawak or the White Rajah.”
In 1846, the British flag was raised on Labuan Island off the cost the east coast of Sabah. And in the following year, Great Britain and Brunei the concluded a Treaty of Friendship and Commerce, at the same time that Labuan was ceded in perpetuity to the crown.
The United States became similarly attracted to Borneo, eager of obtaining the favors that had been secured by other western powers. In 1850, a treaty was signed for the United States advantages for the most favored nation, and later an American consul was appointed to Brunei. Borneo-Sulu area became increasing attractive in terms of commerce for its strategic location in the region, especially maritime traffic.