Kelantan oil royalty suit against federal govt settled after 9 years

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KUALA LUMPUR: After a nine-year legal battle, the Kelantan government’s oil royalty suit against the federal government has been finally settled at the High Court here.

The matter was fully resolved after Kelantan filed a notice of discontinuance against the federal government yesterday to withdrew its suit, which was initiated in 2010.

The state government’s lawyer Aleeya Elyana Ahmad Mahreez said the notice of discontinuance was recorded before High Court Judge Datuk Ahmad Bache.

Justice Ahmad then struck out the suit with no liberty to file afresh and did not make an order as to costs with the consent of both parties.

Senior federal counsel Natrah Idri represented the federal government, which was the second defendant in the suit.

On May 21, it was reported that the Kelantan government had dropped the suit against Petroliam Nasional Berhad (Petronas), which was named as the first defendant, through a notice of discontinuance filed on May 13.

On July 2, 2014 the Federal Court decided that the suit should be returned to the High Court for a legal decision, per Rule 14A of the Rules of Court 2012.

In the ruling, a five-member panel of the Federal Court, led by Justice Tan Sri  Abdull Hamid Embong, said there was no dispute of facts in the case, which required the court to call witnesses to testify.

The Federal Court made the ruling after dismissing the Kelantan government’s appeal against the Court of Appeal’s decision on April 26, 2012, which upheld the High Court’s decision directing that the suit be decided on points of law.

However, the hearing of the legal issues in the High Court had yet to proceed.

On Aug 30, 2010, the Kelantan government as the plaintiff filed the suit against Petronas as the sole defendant.

However, the federal government then succeeded in its intervenor application and was named the second defendant in the suit.

In its statement of claim, the Kelantan government demanded that Petronas would pay the outstanding and future cash payments for petroleum produced off the Kelantan coast, as set in their petroleum exploration agreement.

The Kelantan government had also sought costs and damages, but did not specify the total amount it was claiming from Petronas.

In the suit, the state government said the Kelantan Petroleum Agreement signed on May 9, 1975 clearly stated that Petronas should pay in cash five per cent of oil revenue, either from exploration onshore or offshore.

It claimed that a clause in the agreement stated that payments should be made twice a year, on or before March 1, and one more before Sept 1.

On March 7, Economic Affairs Minister Datuk Seri Azmin Ali said the federal government would pay oil royalty to Kelantan after the proceedings of the withdrawal of the Kelantan government’s suit against it and Petronas were settled. — Bernama