The High Court has on Thursday refused an application by the Kelantan government to transfer its breach of contract and constitutional suit against Petronas over the company's failure to pay the state oil royalty.It had applied to transfer the case from civil court to commercial court and stated that commercial court was proper to hear the matter as the suit was originally filed in the commercial division.
The suit was filed last year.
The state claimed in the suit that Petronas had failed to make cash payments, which it claimed rightfully belonged to Kelantan for petroleum won and obtained offshore since 1998.
The Federal Government last week succeeded in its attempt to intervene in the suit.
High Court judge Justice Zabariah Mohd Yusof had allowed the application after hearing submissions by parties from the Federal Government and Kelantan.
With the ruling, the Federal Government was named as the second defendant in the suit in addition to Petronas.
In the suit filed filed on Aug 30 last year, the Kelantan government said Petronas had failed to make cash payments, which it claimed rightfully belonged to Kelantan for petroleum won and obtained offshore since 1998.
The State government said Petronas had breached the Petroleum Development Act, the Kelantan Petroleum Agreement and Kelantan Grant, for failing or refusing to make cash payments to the Kelantan government for petroleum won and obtained off Kelantan.
The claim stated Petronas should make yearly cash payments equivalent to five per cent of the value of the petroleum won and saved onshore and offshore Kelantan and sold by Petronas, its agents or contractors, to the Kelantan government.
It said despite failing to make the said cash payments, Petronas wrongfully continued to win and obtain petroleum off Kelantan.
Such conduct on the part of Petronas constituted unfair discrimination which resulted in severe financial loss to the State government and would continue to do so.
The State government is also seeking for an order all arrears of cash payments be paid to Kelantan within a month of the court order.