High Court bank guarantee ruling won’t stop PETROS’ DGO 2016 rights fight

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By DayakDaily Team

KUCHING, Feb 25: The High Court’s decision on the bank guarantee dispute with Petroliam Nasional Berhad (PETRONAS) does not impair Petroleum Sarawak Berhad’s (PETROS) ability to pursue further legal action to clarify its rights under the Distribution of Gas Ordinance 2016 (DGO 2016).

In a statement today, PETROS said the case, which involved the unconscionable call of a RM7.95 million bank guarantee under the Sarawak Gas Sale Agreement (GSA), was decided solely on technical grounds relating to the guarantee.

“The Kuching High Court did not make any decision on the underlying legality of the Sarawak GSA, nor did it rule on the merits of the constitutional arguments concerning the DGO 2016,” the statement read.

PETROS added it will review the written judgment carefully before deciding on appropriate next legal steps.

The ruling came after Judicial Commissioner Datuk Farids Gohim Abdullah held that PETROS had failed to show PETRONAS’ demand on the bank guarantee was unconscionable or unlawful, affirming PETRONAS’ commercial claim and awarding it RM50,000 in costs.

However, the court refrained from addressing broader constitutional questions, noting such issues are outside the scope of the originating summons and fall within the jurisdiction of the Federal Court of Malaysia.

The constitutional dispute centres on the relationship between the federal Petroleum Development Act 1974 (PDA 1974) and Sarawak’s DGO 2016. Legal experts said the High Court’s ruling was strictly confined to commercial aspects, leaving the constitutional validity of the two laws to be determined by the apex court.

PETRONAS is expected to apply for leave at the Federal Court on March 16 to have the constitutional issues heard, a move reportedly opposed by PETROS.

Separately, the Sarawak government has filed its own petition, also anticipated to be considered by the Federal Court.

With the High Court declining to interpret the constitution, all matters regarding the validity and scope of the PDA 1974 and DGO 2016 will now await determination by the Federal Court. — DayakDaily