The High Court today granted the Kelantan government a stay of the hearing of its suit against Petroliam Nasional Berhad or Petronas for alleged breach of contract over oil royalty, pending an appeal at the Court of Appeal.

Lawyer S Sitpah, who acted for the state government, told reporters that High Court judge Rosnaini Saub allowed the stay, pending appeal which was fixed on Dec 7.

The state government is appealing against the High Court’s dismissal of its application to include 14 questions of law in the hearing of the suit.

The court had initially fixed two days beginning Nov 23, to hear the suit.

On July 2 last year, the Federal Court ordered the suit to be remitted to the Kuala Lumpur High Court for disposal, by way of determining the points of law without a full trial under Order 14A of the Rules of Courts 2012.

In the ruling, the five-member panel of the Federal Court judges led by Abdull Hamid Embong said there was no dispute of facts in the case, so as to require the court to call witnesses to testify.

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

On Aug 30, 2010, the state government filed the suit against Petronas, demanding that the oil corporation make outstanding and future cash payments to it for petroleum produced off the Kelantan coast, as set in their petroleum exploration agreement.

In the statement of claim, the state government also sought damages and costs. However, it did not specify the total amount of the claims sought 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 percent of oil revenue, either from exploration onshore or offshore.

It said a clause of the agreement stated that the payment should be made in cash twice a year, on or before March 1, and on or before Sept 1.

In the suit, the Kelantan government had named Petronas as the sole defendant. However, the federal government then succeeded in its intervenor application and was named the second defendant.

- Bernama