PUTRAJAYA (June 22): The Federal Court today dismissed Petroliam Nasional Bhd's (Petronas) application for leave with RM50,000 cost to commence legal proceeding against the Sarawak State Government, in its challenge against the latter's claim to regulatory authority in the upstream oil and gas (O&G) sector within the state.

According court submissions by the Sarawak Government, Petronas had sought leave pursuant to Article 4(4) of the Federal Constitution to commence proceedings under Article 128(1)(a) read with Article 4(3).

However, Chief Judge of the High Court of Malaya Tan Sri Wira Ahmad Haji Maarop said the declaratory reliefs sought by Petronas do not come under these provisions.

"In my view, the declaratory reliefs sought by the applicant do not come into the ambit of Article 4(3) and 4(4) of the Federal Constitution. Hence the reliefs sought by the applicant are not within the exclusive original jurisdiction of the federal court. The declaratory (reliefs) sought [are] within the constitution of the high court (of Sarawak). Thus the question of leave on Article 4(4) of the Federal Constitution does not arise. In result, the application is dismissed," he said.

Meanwhile, legal counsel Datuk Malik Imtiaz Sarwar, who represented Petronas, also applied to strike out the national oil company's application for a stay order in respect of the Sarawak Government's commencement to regulate upstream activities in the state under the Sarawak Oil Mining Ordinance 1958 (OMO) beginning July 1 this year.

Hence, to comply with the OMO, Petronas is required to have the requisite licences or leases by July 1.

After hearing the court's decision, Assistant Minister of Law, State-Federal Relations and Project Monitoring Sharifah Hasidah Sayeed Aman Ghazali lauded the judgement, describing it as "the rule of law has prevailed".

"It's good for Sarawak, Alhamdulillah, and it's a success for us, the rule of law prevailed. The status quo maintained. We really want to work with Petronas for the interest of the nation and the prosperity of the Sarawak state. What we want is prosperity for all parties, including Petronas and Sarawak.

"We will continue to fight for Sarawak's rights; as far as we are concerned, the OMO is a valid law, a good law, and it is enforceable in Sarawak. As the court has said, it is not a law that can be simply repealed or superseded by any other law, so we will enforce our OMO," she said.

Meanwhile, Sarawak Attorney General Datuk Talat Mahmood Abdul Rashid, who was also present here, said under the OMO, the state government can delegate regulatory power to Petroleum Sarawak Bhd, Sarawak's wholly-owned O&G company, which the state government claims to have equal standing with Petronas in terms of O&G activities in Sarawak.

"Anything that we do will not interfere with current arrangements, we are not going to make it more difficult for the investors, that is one thing that we can assure. July 1 is the date when we want to ensure this is being implemented, obviously in our engagement with stakeholders before, they have indicated that we will give grace period or interim period until the end of 2019, this is actually been made known to everybody there, so they don't need to worry that their operation will be disrupted," Talat Mahmood said.

"They will be allowed to continue their operation, we might probably give them an interim licence, that is a matter for the appropriate Ministry, our role is here to advise," he added.

Legal counsel Datuk JC Fong, who represented the Sarawak Government, also said the state government remains committed in complying with the Federal Government's law in future.

"We got the court to dismiss Petronas's application, we will continue to work with Petronas and we hope Petronas will continue to work with us at state level, to harmonise the two laws (OMO and Petroleum Development Act 1974, PDA) in the national interest. We only want Petronas, who is in Sarawak getting the benefit of the state's natural resources that is petroleum, to comply with state laws, it is as simple as that.

"We will comply with federal laws, which are of course, need to be conditionally enacted, but we also want Petronas to comply with the state law, that is what the dispute is about. Because Petronas says they don't want to comply, which is not acceptable, that is where the dispute starts. But we will not enforce our law in a manner that will hurt anybody, including the O&G industry in Sarawak, my Chief Minister has repeated this many times, so Petronas got to trust that we will do that in a manner the Chief Minister has assured," he said.

On the other hand, Malik Imtiaz said his firm will now wait for further instructions from the national oil company.

"We have to consider what the court said, and take instructions from there. Sarawak Government's argument was because we did not ask for specific type of declaration in that particular language, and the Court seem to have agreed with them. But this is something new, it is a precedent that the court has set," he said.

"Petronas is clear about its position, this doesn't mean that the PDA is invalid, and doesn't mean that the OMO is valid, it just means that Federal Court has said in the form that we came, it doesn't fall under the jurisdiction of this court, so the issue is still very much alive, it is not being determined in any way. This is just a procedural step, no determination of anything yet. According to the judge, if we want those particular reliefs, we can file at the High Court. The issue is whether the PDA applies to Sarawak or not, this has not been decided, and the PDA says it does," he added.