Oil suit shuffle upsets Kelantan

The Kelantan government is baffled that its bid to claim oil royalty from Petronas has been moved from court to court for hearing since it was filed five months ago without either party’s application and is now postponed indefinitely.

A source close to the PAS-ruled state government told The Malaysian Insider today the case was originally set to be heard in the High Court’s commercial division following its filing on August 30 last year.

The source, who spoke on condition of anonymity, said the case was shifted to another judge’s courtroom after the ruling Barisan Nasional (BN) federal government applied to intervene in the dispute.

In its application, Kelantan had only named the national oil company as the sole defendant.

The Malaysian Insider understands the original trial judge was transferred to Penang soon after.

Justice Nalini Pathmanathan, also of the commercial division, was then appointed to hear on Monday morning Putrajaya’s leave application to be made a party.

The federal government is understood to be backing Petronas in the dispute.

Three days ago, the High Court here informed the Kelantan government that its case has now been moved to the civil division, but did not name the new trial judge nor fix a hearing date.

Lawyer Tommy Thomas, who is acting for Kelantan, confirmed the news when contacted today.

“I don’t know the reason for the transfer from the commercial division to the civil division. The Kelantan government did not make an application seeking such a transfer; neither did Petronas, to our knowledge,” he said.

The veteran lawyer explained that Kelantan had the right, as the plaintiff, to decide which court it wanted to file the suit in.

Thomas said his client had deliberately chosen to file the case in the commercial division of the KL High Court when it could have sued in the Kota Baru High Court.

He said that Petronas, as the defendant, could apply to transfer the case elsewhere, but must make a written application to the High Court to do so and must formally inform the Kelantan government as well.

“We did not receive any court papers from Petronas asking for a transfer,” he said.

Kelantan has been demanding that the federal government pay the five per cent royalty for oil extracted off its shore as stipulated in the Petroleum Development Act 1974.

Under agreements signed in the mid-1970s, all state governments were promised cash payment or royalty of five per cent for petroleum extracted onshore or offshore in return for surrendering their control of petroleum resources to the national oil company.

But Putrajaya has maintained that the east coast state is not entitled to the payment as the oil and gas are extracted from waters that are beyond the three-nautical mile limit prescribed as territorial waters under Malaysia’s Emergency Ordinance (Essential Powers) No. 7, 1969.

The federal government has instead promised to make goodwill payments or “wang ehsan” through its agencies in the state, which has been under PAS rule since 1990.

The oil field situated in the South China Sea is being jointly developed by Malaysia and Thailand because of overlapping claims over the continental shelf.

Terengganu had also filed a similar suit when the federal government ordered oil royalty payment to be stopped after PAS took over the state in 1999.

Payment to the state was reinstated early in 2009 after BN reclaimed power. - Malaysian Insider