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Kelantan files appeals on oil royalty suit

April 22, 2011

Apr 21, 11 10:25am
The PAS-led Kelantan government today filed two appeals in the Court of Appeal relating to its suit against national oil company Petronas over allegations of unpaid oil royalty.

It is appealing the decision of the High Court in Kuala Lumpur last month to include the federal government, despite it not being party in the original suit, as the second defendant.
The matter was heard in chambers for case management before High Court judge Zabariah Mohd Yusof, who fixed May 22 for the case to be mentioned, pending any appeal from the Kelantan government.

Kelantan is also appealing the High Court’s decision not to transfer the case from the civil court to the commercial court.

The state government in its suit filed on Aug 30 last year named Petronas as the sole defendant. The suit was filed in the Commercial Division of the High Court.

However, earlier this year, the case was transferred to the Civil Division.

Rishwant Singh appeared for Petronas while senior federal counsel Noorhisham Ismail represented the federal government, with Nor Ashikin Abdul Rahim appearing for the Kelantan government.

Noorhisham submitted a federal government application under Order 14A for a trial on a point of law.

While the parties have agreed with the facts presented in the case, they are disputing some points of law on the issue of payment.

Petronas has also filed a similar Order 14A application.

Federal government included as party last month

On March 22, Justice Zabariah allowed the federal government’s application to be included as an intervener in the suit.

A week later, the court dismissed the Kelantan government’s application for the case to be transferred back to the commercial court, ruling that it should remain before the new civil court.

Kelantan senior state exco Husam Musa (right) had in his affidavit in support of the state’s application had said the transfer of the case to the civil court in January was not made based on any formal application by any party to the suit.

“Kelantan is aggrieved that the decision to transfer (the matter to the civil court) was made administratively and without its knowledge or consent, and without it being given an opportunity to being heard.

“Accordingly, it is a wrong decision in law and ought to be rectified,” Husam stated in his affidavit filed on March 15.

The Kelantan government in its statement of claim says the state is entitled to five percent of the petroleum won and saved on-shore and off-shore, in accordance with the Petroleum Development Act 1974 (PDA).

This was part of the agreement signed between the then Kelantan Menteri Besar Mohamed Nasir and Petronas founding chairperson, Tengku Razaleigh Hamzah.

The state is arguing that there are four off-shore oil projects within Kelantan’s waters and thus Petronas is obligated, under the PDA, to make cash payments twice annually, which Petronas has denied.

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