High Court To Consider Issues Of Law On Oil Royalty

KUALA LUMPUR: The High Court has granted applications by the Federal Government and Petroleum Nasional Bhd (Petronas) to hear and dispose of a breach of contract and constitutional suit on issues of law.

High Court judge Justice Zabariah Mohd Yusof granted leave to both parties yesterday after hearing lengthy submissions.

The two had applied for the judge to determine the suit on issues of law under Order 14A of the Rules of the High Court 1980 and Order 33 of the same Rule without going for a full trial.

Senior Federal Counsel Datin Azizah Nawawi acted for the Federal Government, Tan Sri Cecil Abraham represented Petro­nas while counsel Ganesan Nethi and Nur Ashikin appeared on behalf of the Kelantan government.

“Three issues of law have been proposed by the Federal Govern­ment for the suit while five questions have been submitted by Petronas,” SFC Azizah said.

Among the issues was whether the Kelantan government has any rights under the law over petroleum won and saved in the “continental shelf” and whether it is entitled for any payment in respect of the concerned petroleum.

Justice Zabariah has set Feb 20 for case management of the suit.

The Kelantan government had on Aug 30, 2010 filed a breach of contract and constitutional suit against Petronas over the oil giant’s failure to pay royalty to the state.

The state claims in the suit that Petronas had failed to make cash payments, which it claimed rightfully belonged to Kelantan for petroleum won and obtained offshore since 1998.

According to the statement of claim, Petronas had wrongfully, in total failure of consideration and in breach of the Petroleum Deve­lopment Act, the Kelantan Petro­leum Agreement and Kelan­tan Grant, failed and/or refused to make cash payments to the Kelan­tan government for petroleum won and obtained off Kelantan.

Source : The Star