Nov 22 hearing on bids by Petronas, state govt to strike out suit
by Suraini Andokong. Posted on September 24, 2013, Tuesday
KOTA
KINABALU: The High Court here will hear on November 22 applications by
Petroliam Nasional Berhad (Petronas) and the State Government to strike
out a suit brought by six Sabahan businessmen who are seeking a
declaration that the agreement between the national petroleum company
and Sabah State Government in 1976 pertaining to the five per cent oil
royalty payments is null and void.Justice Chew Soo Ho, also ordered the plaintiffs, Zainal Ajamain, Michael Peter Govind, PAS leaders Lahirul Latigu, Mohd Julpikar Ab Mijan and SAPP’s Joseph Wilfred Lakai, Duli @ Dullie Mari @ Marie to file and exchange their affidavits in support to oppose the applications by Petronas and the State Government.
Petronas had filed their application to strike out the suit on February 14 this year while the State Government filed their application on September 20.
In their affidavit in support, Petronas, among others, claimed that (i) on June 14, 1976, Petronas and the State Government entered into an agreement whereby all ownership in, and the exclusive rights, power, liberties and privileges of exploring, exploiting, winning and obtaining petroleum whether onshore or offshore Sabah would be vested in the defendant in return for a cash payment of five per cent of petroleum so won and saved to the State Government.
(ii) On June 14, 1976, Petronas and the State Government executed a Vesting Instrument as per the terms of the Schedule to the Petroleum Development Act 1974 (PDA).
(iii) Petronas verily believes that this action is time barred under the Public Authorities Protection Act and/or the Limitation Ordinance (Sabah Cap. 72) and that there is no escaping the limitation defence.
(iv) The PDA 1974 was passed and came into effect in 1974, under the PDA, the defendants negotiated the Agreement and that the Agreement has been in effect since 1976 and the Agreement does not conflict with the Federal Constitution and Article 74 and the ninth and 10th Schedule thereof, in particular; In any event, as a matter of constitutional law, the Agreement is not and cannot be ruled unconstitutional.
(v) In the circumstances of this case the vesting of all ownership in, and the exclusive rights, powers, liberties and privileges of exploring, exploiting, winning and obtaining petroleum whether onshore of offshore Sabah in the defendant took place with the knowledge and consent of the State of Sabah (the second defendant), the Federal Government and Petronas (the defendant). There is accordingly no issue of unconstitutionality of the Agreement. The PDA does not contravene Article 74 or the ninth and 10th Schedule of the Federal Constitution.
On September 25, 2012, the six plaintiffs, who called themselves “Royalty for Sabah”, had filed the writ of summon at the High Court’s registry here through their counsel Marcel Jude A/L M S Joseph naming the Petroliam Nasional Berhad and Sabah State Government as first and second defendants respectively.
They are seeking a declaration that PDA 1974 in so far as it applies to the said agreement entered on June 14, 1976 is also ultra vires null and void.
They are also seeking damages, costs, statutory interest and any other relief deemed fit by the court.
In their statement of claim, the plaintiffs claimed that the first defendant is a company incorporated under the Company’s Act whose registered office is situated at Jalan Pudu, Kuala Lumpur while the second defendant is the lawful government and authority for the State of Sabah in the Federation of Malaysia.
They pointed out the defendants entered the agreement after the Petroleum Development Act 1974 was passed.
The plaintiffs stressed that by the Petroleum Development Act, 1974, the entire ownership and the exclusive rights, powers, liberties and privileges of exploring, exploiting, winning and obtaining petroleum whether lying onshore or offshore of Malaysia is vested in Petronas.
In return of this, they claimed it is agreed that Petronas shall make to the government cash payment in the form of yearly sum amounting to the equivalent of five per cents of the value of the petroleum won and saved from areas in Sabah and sold by Petronas or its agents or contractors during the period provided in Clause 2.
It is further agreed that the government waives any right to royalty or any other payment payable pursuant to any oil mining lease, license or agreement under the Land Ordinance of Sabah or any other written law relating to petroleum for the time being in force in Sabah.
They stressed that the said agreement is null and void and ultra vires article 74 of the Federal Constitution and the Ninth Schedule of the Federal Constitution which among others stated, except as to State rights over permits and licences, that the Federal Government has rights over development of mineral resources, mines, mining, minerals and mineral ores, oils and oil fields, petroleum products, safety in mines, oilfields, gas and gasworks, production and distribution of power and energy.
They claimed that in addition to the right of the states, Sabah and Sarawak enjoy some special sources of revenue namely assigns import duty and excise duty on petroleum products to Sabah and Sarawak, assigns royalty and export duty on “mineral oils” totaling 10 per cent to both states.
The plaintiffs pointed out that “Petroleum”, as defined in the Petroleum Development Act, falls within the meaning of “mineral oils” and, therefore, 10 per cents combined royalty and export duty on it constitutes part of the guaranteed revenue for Sabah and Sarawak.
Furthermore they claimed that the agreement is unenforceable by reason of the Petroleum Act 1974 being in contravention of Article 13 of the Federal Constitution of Malaysia which states that no law shall provide for compulsory acquisition or the use of property without compensation.
The plaintiffs also said that the agreement was executed by the executive arm of the State Government of Sabah and has yet to receive the approval and consent of the State Legislative Assembly and is therefore ultra vires null and void.
They pointed out that the agreement is also ultra vires null and void as it is merely a vesting deed and to date there is no agreement or contract between the first and second defendants in regard to the sharing and exploitation of the onshore and offshore resources of petroleum belonging to the state of Sabah.
Further they claimed that the vesting of the petroleum resources of Sabah under the said agreement by the second defendant into the hands of the first defendant by which is neither the executive or legislative part of the Federal Government of Malaysia but merely a company incorporated under the Company’s Act 1965 is ultra vires null and void.
Meanwhile they pointed out that it was reported in the local media on September 20, 2012 that there was the signing of the Kuching Declaration to restore the rightful place of Sabah and Sarawak in Malaysia if the Pakatan takes over the federal government.
According to the mass media reports, they said the declaration was to honor the spirit and the 20-point Malaysia Agreement of 1963, which they said had not been fulfilled by the BN government for the last 49 years.
The State Government was represented by State Counsel Mohd Ikhwan Ramlee while Tan Sri Cecil Wilbert Mohanaraj Abraham acted for Petronas.
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