PUTRAJAYA: The Federal Court dismissed Petroliam Nasional Bhd (Petronas) application for leave to commence proceedings against the Sarawak state government.

After hearing arguments from both parties on Friday, Chief Judge of the High Court of Malaya Tan Sri Wira Ahmad Ma’arop said he was satisfied that Sarawak legal counsel team has proven their case and awarded RM50,000 cost to the Sarawak state government.

The hearing of the landmark case was supposed to be done on June 12 this year but it was postponed as the Federal Government’s Attorney General’s Chamber (AGC) decided to participate and required more time to look into the case.

Senior federal counsel Shamsul Bolhassan was in attendance, holding a watching brief on behalf of Attorney General’s Chamber (AGC).

AGC would be a party in the case if leave was granted.

Petronas had filed an application for leave to commence proceedings under Article 4 (4) of the Federal Constitution, seeking a declaration that the Petroleum Development Act 1974 (PDA) applied with regard to the regulatory control of upstream activities in Sarawak.

The company is also seeking a declaration that the Sarawak Oil Mining Ordinance (OMO) 1958 was impliedly repealed by the PDA.

Petronas is seeking a declaration that the PDA was duly enacted by Parliament and stated that Petronas is the exclusive regulatory authority for the upstream industry throughout Malaysia, including in Sarawak.

Ahmad Ma’arop, in dismissing the application, said Petronas application did not fall under Article 4(3) and 4(4) of the Federal Constitution where it did not seek to declare OMO as invalid.

“The Sarawak state government also did not say that the Petroleum Development Act 1974 did not go against the ordinance.

“Hence, the Petronas motion for leave for the matter to be heard at this court (Federal Court) on its substantive is dismissed,” he said.

“The application by Petronas can be heard at the High Court,” the Chief Judge of Malaya added.

In Thursday’s proceedings, the court heard arguments from both Petronas and the Sarawak government with regard to Petronas’ legal standing to file the application for leave to commence proceedings in the Federal Court to determine the matters raised by the company.

Datuk JC Fong, who represents the Sarawak Government, said this case is not about challenging the constitutional power of Parliament in making or changing the law in Sarawak’s upstream O&G activities.

“This issue is not within the power of Federal Court to decide, it is a matter of judicial interpretation by the High Court. Secondly, the Oil Mining Ordinance 1958 (OMO) is a law passed by the state before Malaysia Day.

“After Malaysia Day, that ordinance remains good law and applies only to Sarawak.

“Thirdly, OMO is not about oil and oilfields, it is about regulating the exploration, exploitation and mining of petroleum on land in Sarawak, and the OMO covers all these activities on shore or continental shelf. In this case we are of the view that Petronas has to comply with state laws, particularly the OMO and Sarawak Land Code,” he said.

Meanwhile, Petronas legal counsel Datuk Malik Imtiaz told reporters that the case does involve legislative power.

“The dispute is whether the subject matter pertains to legislative power or not, our view is it does, because what Sarawak is saying is that the OMO is valid law which the state is entitled to enforce.

We are saying the power to control and regulate upstream activities is something (that) fall within the purview of Parliament exclusively, if that is right, the state has no power to enforce OMO, because the state power depends on legislative power, that is our argument,” he said.

Malik also said the matter cannot be taken to the High Court because his understanding is that interpretation of the Constitution for purposes like this is something within the Federal Court’s jurisdiction.

“The other issue is whether we have applied for sufficient declaratory orders, what we asked for was an order that Parliament has the exclusive competence to enact laws on upstream activities, and consequentially we say that PDA is a valid law, because of that and consequentially PDA gives power to regulate throughout the country regardless of offshore or onshore, accordingly, because of Malaysia Act, OMO would have become Federal law, and since PDA was passed, OMO has been repealed impliedly,” he said.