This writer has previously raised the point that KWAP's RM 4 Billion seized by Singapore may be hostage to Malaysia-Singapore Water agreement negotiations
Having said that Malaysia does have the option of terminating the agreement, on the basis that it can no longer be performed:
Malaysia-Singapore Water Agreements: Singapore research reveals factors that have not been considered by Malaysia when determining price of raw water
If Malaysia chooses to do so, which it can, compensation may be payable, and it can be limited to that RM 4 Billion Singapore owes Malaysia. Singapore is not the only country in the world to face what it keeps referring to as an existential threat to its sovereignty;Egypt and Ethiopia have been having similar discussions for almost as long as Malaysia and Singapore.