KUALA LUMPUR (May 4): Nearly two months after the Kuching High Court dismissed its bid to recover a RM7.95 million bank guarantee, the first case management for Petroleum Sarawak Bhd's (Petros) appeal is set to be held on June 22 at the Court of Appeal.
Sources confirmed that Petros has lodged a notice of appeal over judge Datuk Faridz Gohim Abdullah's Feb 25 decision, with the matter now pending before the Court of Appeal.
Meanwhile, on March 16, a single-member Federal Court bench presided by Chief Judge of Malaya Datuk Seri Hashim Hamzah granted leave (permission) to Petroliam Nasional Bhd (PETRONAS) to challenge the competency of several Sarawak state laws.
This sets the stage for the apex court to potentially decide on the very constitutional issues that the Kuching High Court declined to rule upon.
High Court dismisses Petros' bank guarantee bid
In the Kuching High Court decision now under appeal, Faridz dismissed Petros' bid to recover a RM7.95 million bank guarantee taken by PETRONAS in February 2024.
The judge also declined to rule on constitutional questions regarding the Petroleum Development Act 1974 (PDA) and the state's Distribution of Gas Ordinance (DGO).
In his 50-page grounds sighted by The Edge, the judge agreed with PETRONAS' counsel that none of the provisions relied upon by Petros gave the court jurisdiction to make a declaration on the validity of the Sarawak Gas Supply Agreement (Sarawak GSA) or the constitutional issues.
Faridz noted that PETRONAS' counsel had cited Order 7, Rule 2(1A) of the Rules of Court 2012, which requires every originating summons (OS) to state in its intitulement any provision of written law under which the court is being moved to decide.
"In this OS, Petros has failed to cite any relevant law to support such an order for this court to make. The PDA 1974, the DGO 2016, and the Contracts Act 1950 were not cited in the intitulement of the OS," he said. "The court is not entitled to decide a suit on a matter that is not pleaded."
The judge added that Petros had not amended its reliefs despite a change in circumstances, nor had it sought declarations that the Sarawak GSA was unlawful under the DGO, that the DGO applies to PETRONAS, or that the PDA does not prevail over the DGO under Article 75 of the Federal Constitution.
Article 75 of the Federal Constitution constitutes the doctrine of supremacy where it establishes the supremacy of federal law over state law. It states that if any state law is inconsistent with a federal law, the federal law shall prevail, and the state law shall be void to the extent of the inconsistency.
Beyond Petros' appeal, PETRONAS has secured leave from the Federal Court to challenge the inconsistency between the PDA 1974 and several Sarawak state laws, including the DGO 2016, the Environment (Reduction of Greenhouse Gas Emission) Ordinance 2023, the Sarawak Land (Carbon Storage) Ordinance, and others.
Adding another layer, the Sarawak government has filed a separate petition challenging the legality of the PDA, the Continental Shelf Act 1966, and the Petroleum Mining Act 1966.
With these parallel proceedings, it is likely that the Federal Court will ultimately decide the constitutional questions surrounding gas regulation — matters the Kuching High Court declined to rule on.
Petros, commenting on Faridz decision, had said the case was solely on technical grounds concerning the bank guarantee under the Sarawak GSA. It did not rule on the legality of the Sarawak GSA or constitutional issues under the DGO.
"The decision does not prevent Petros from pursuing further legal action to clarify its rights and position under the DGO."