The oil royalty suit initiated by the Terengganu state government against national oil company Petronas and the federal government has been remitted to the High Court for a fresh hearing on preliminary issues.

The Court of Appeal today made the order after allowing an appeal by Petronas and the federal government against a High Court decision on Aug 29 last year that the matter must be heard in full trial.

The High Court then had dismissed an application by Petronas and the federal government that the suit filed by the state government can be dealt by deciding on preliminary issues alone.

The Terengganu state government had opposed the application, stating that it should be allowed to proceed with a full trial and call its witnesses to give evidence before a trial judge.

The High Court judge agreed with the state government and dismissed the application by Petronas and the federal government.

Wrong conclusion

However in a written judgment today, the Court of Appeal ruled that the High Court judge had arrived at his findings without identifying and making proper appraisal of the material facts before him.

The Court of Appeal had reserved its judgment on this matter on July 26 after having heard submissions from all parties.

The three-member panel was led by justice Mohamed Noor Ahmad (now promoted to Federal Court judge), who sat with justices Richard Malanjum and Hashim Mohamed Yusoff.

"We do not agree with the manner in which the High Court judge arrived at his conclusions and findings that this case is far from being plain and simple because it raises a number of complex legal issues," Mohamed Noor was quoted as saying by Bernama today.

The Appellate judges came to a conclusion that the High Court judge had wrongly applied his discretion in dismissing the application.

Wang ehsan

Today's decision would mean the High Court would have to hear submissions from all parties again before deciding if the case should be heard in a full trial or can proceed by way of preliminary issues where no witnesses are needed to be called and arguments are based solely on submissions.

No date has been fixed for this fresh hearing.

The Terengganu government is suing Petronas for wrongfully failing or refusing to make the cash payment totalling more than RM850 million in Sept 2001 for petroleum obtained off the coast of the state for the first half of 2000.

Petronas, in its defence, claimed that it need not make any payment to Terengganu because the oil was obtained outside the state's territorial waters. In a separate defence, the federal government claimed that all payments to Terengganu since 1978 must be deemed as "wang ehsan" (special payment)