Despite setback, Petronas' lawyer says questions remain over petroleum laws in Sarawak

Ida Lim
The lead counsel for Petronas, Malik Imtiaz Sarwar, speaks to reporters at the Federal Court in Putrajaya June 22, 2018. — Picture by Azinuddin Ghazali

PUTRAJAYA, June 22 ― Questions over what law applies over the regulation of petroleum activities in Sarawak is still “alive” and has not been put to rest with a Federal Court decision today, national oil firm Petronas' lawyer said.

Datuk Malik Imtiaz Sarwar, the lead counsel for Petronas, noted the top court's decision today only meant that it felt the national oil company's case does not fall under its jurisdiction and can be heard in the High Court instead.

“It just means that the Federal Court has said, in the form that we came, it didn't think it was within the jurisdiction of this court.

“So the issue is still very much alive, not been decided in anyway,” he told reporters after the ruling.

Imtiaz said the Federal Court had today only decided on a procedural matter on whether it will allow Petronas' legal challenge to start and be heard, and had not ventured into the substantial issues of the legal dispute between Petronas and the Sarawak government.

“Merits haven't been decided. There's no merits decided.

“This doesn't mean the PDA is invalid, it doesn't mean the OMO is valid,” he said, referring to some of the main issues in the case.

Petronas wanted the courts to declare that it has the exclusive regulatory authority” over upstream activities ― including exploration, exploitation, winning and obtaining of onshore and offshore petroleum ―  throughout Malaysia, and to also declare that Parliament's Petroleum Development Act (PDA) 1974 had impliedly repealed the Sarawak Oil Mining Ordinance (OMO) 1958.

Sarawak argues that OMO ― which it will rely on to start regulating and issuing licences for Sarawak's upstream oil and gas activities including by Petronas starting from next month ― is still a valid state law. This substantial issue has not been heard by the courts.

The Federal Court's decision comes just days before the Sarawak government begins regulating upstream petroleum activities in the state.

As the Federal Court had denied leave for the legal challenge to be heard, the apex court also struck out ― at Imtiaz's request ― an earlier application by Petronas for a stay order on the Sarawak government's starting of regulation of upstream activities from July 1.

When asked if Petronas will file a fresh challenge in the High Court or what are its options now, Imtiaz said he will have to take instructions from his client.

“We have to consider what the court said just now, because the Sarawak government's argument was because we didn't ask for a specific type of declaration in that particular language and that was what the court seemed to have agreed today.

“This is something new, a precedent has been set,” he said.

“According to the judge, if we want those particular reliefs, we can file in the High Court,” he said, but reiterated that he will have to seek Petronas' instructions on its next step.

Based on court documents, Petronas did not expressly ask for the court to declare the 1958 Sarawak state law as invalid, but instead had asked the court to declare the state law as having been impliedly repealed by the 1974 federal law.