The High Court in Kuala Lumpur today allowed the federal government to intervene in the PAS-led Kelantan government's suit against Petronas over unpaid royalty.

Justice Zabariah Mohd Yusof made the decision in chambers today after submissions by senior federal counsel Azizah Nawawi, counsel Tommy Thomas for the Kelantan government and Cecil Abraham and Rishwant Singh for Petronas.

After hearing submissions for 80 minutes, Justice Zabariah allowed the federal government's application to be part of the suit.

azlan The Kelantan government had filed a suit against Petronas on Aug 30 last year, seeking royalty payments for oil extracted off the coast of the state.

Rishwant told reporters that the court fixed March 31 to hear the case, or for the Kelantan government to decide whether or not to proceed with its application for the case to be transferred back to the commercial court.

The case was originally filed at the commercial court before the High Court deputy registrar decided to transfer the case to the new Civil High Court.

The fast-track court, created by the chief justice, has instructions to dispose of a case within nine months of it being filed.

Legal arguments

Azizah, who heads the civil division of the Attorney-General’s Chambers, submitted that the federal government was entitled to be part of the suit since the boundary of three nautical miles off the Kelantan coast belonged to the federal government.

What Kelantan is claiming, she argued, was part of the international boundary, where the oil field is said to fall within the Vietnam and Thailand development triangle.

The federal government filed its application to be an intervener on Nov 19 last year, arguing that it should be made a defendant so that all matters being disputed could be decided and judged effectively and holistically.

This was to ensure that all legal questions and issues arising from or concerned reliefs sought by the state government were decided fairly and appropriately between the federal government and Petronas.

The Kelant

reza zamhari an government in its statement of claim contended that no requirement of three nautical miles radius was stated in the Petroleum Development Act 1974 (PDA), and that Petronas was required to pay five percent of the value of the petroleum won and saved onshore or offshore.

The state government has identified that the oil is extracted from four blocks - in Kelantan; the Kelantan-Thailand waters which forms part of the (Joint Development Area between Malaysia-Thailand); Kelantan-Vietnam (Joint Development Area between Malaysia-Vietnam); and the Kelantan-Terengganu border.

Kelantan claims that Petronas has breached its obligations under the PDA and the Kelantan Petroleum Agreement in relation to providing information:

  • about its exploration activities in areas off Kelantan, whether in the four blocks or elsewhere; and
  • about the extent of its production of petroleum off Kelantan; and to make cash payments in respect of petroleum owned off the coast of the state.