KUCHING: Petroliam Nasional Bhd’s (PETRONAS) has failed in its bid to convert Shell MDS (Malaysia) Sdn Bhd’s gas payment dispute into a full trial with witnesses and cross-examination.
The Premier’s Office, in a media statement today said Kuala Lumpur High Court Judge Mahazan Mat Taib ruled that the payment dispute between PETRONAS and Petroleum Sarawak Bhd (PETROS) involves questions of law, not fact and therefore does not warrant a conversion from an originating summons (OS) to a writ action.
The Court held that an originating summons under Order 17 of the Rules of Court 2012, is a self-contained process, designed specifically to resolve competing claims against a neutral party. Converting such proceeding into a writ would fundamentally alter its nature, turning it into an adversarial action and defeating the very purpose of an interpleader proceeding.
“There is no basis for a conversion from an OS to a writ, as the issue is related to the gas sales agreement (between PETRONAS and Shell MDS, and PETROS and Shell MDS) and other related government instruments.
“There is no witness credibility (in question) as the issue is a matter of federal and state laws. It is a matter of law and not facts (for determination).
“This does not justify conversion as facts are not disputed, and the issue is on legal and documentary evidence. The court agrees to maintain the interpleader OS and not convert it into an adversarial trial,” said Mahazan when delivering his judgement on Wednesday, adding that a full trial would delay the resolution of the case.
Shell MDS had remained neutral in PETRONAS’ bid on Feb 21 to convert the proceedings into a full trial, while both PETROS and the Sarawak government opposed the move.
The Court agreed with Sarawak’s argument that converting the Originating Summons into a writ action would transform the matter into a fully adversarial claim, thereby defeating the vary objective of an interpleader proceeding.
It further held that PETRONAS’ attempt to expand the dispute beyond the question of entitlement – particularly into constitutional issues – was not permissible under Order 17. The scope of an interpleader proceeding is limited solely to determining to whom the stakeholder (in this case, Shell) should make payment, and not to reopen wider policy or constitutional questions.
Mahazan directed that a date be fixed for the filing of documents, but PETRONAS’ lawyers, Khoo Guan Huat and Datuk Azian Aziz, instead requested case management to obtain further instructions.
The judge subsequently fixed Nov 10 for an online case review.
The hearing was also attended by federal counsel Muhammad Muhairi Mohamad Noh, representing the federal government; Foo Joon Liang, appearing for PETROS; and Datuk JC Foong, representing the Sarawak government.
Shell MDS, represented by Christopher Leong and Janet Chai Pei Ying, had filed the originating summons (OS) against PETRONAS and PETROS in November 2024 after receiving invoices from both parties for gas supplied to its Bintulu plant.
The company sought a court determination on which entity should be paid, having signed a gas supply agreement with PETRONAS in 2020 and another with PETROS in 2024 following Sarawak’s decision to appoint PETROS as the sole gas aggregator in the state.
The company also secured a court order allowing it to temporarily suspend payments to both PETRONAS and PETROS while continuing to receive gas.
PETRONAS contested the order, and the Court of Appeal later directed Shell MDS to pay PETRONAS, emphasising the need for a speedy resolution.
As of Oct 6, Shell MDS owes PETRONAS nearly RM1 billion.
Meanwhile, PETROS has filed a separate suit against PETRONAS at the Kuching High Court to stop it from using PETROS’ bank guarantee for gas payments, arguing that PETRONAS isn’t licensed to operate in Sarawak under state law – Distribution of Gas Ordinance 2016 – and its amendment in 2023.
Hearing of the case will resume on Nov 17, before Judicial Commissioner Datuk Faridz Gohim Abdullah.
