COURT OF APPEAL RULES PETRONAS DID NOT BREACH AGREEMENT, HIGH COURT ERRED IN GRANTING INJUNCTION

PUTRAJAYA, Sept 24 (Bernama) -- The Court of Appeal has held that Petroliam National Berhad (Petronas) did not breach its gas supply agreement with Shell MDS (Malaysia) Sdn Bhd, ruling that the High Court erred in granting an injunction compelling the company to continue supplying gas.

Justice Datuk Wong Kian Kheong, in his broad grounds, said the High Court Judicial Commissioner had failed to consider Section 53 of the Specific Relief Act 1950, which requires Shell MDS to prove that Petronas had breached the signed agreement.

“In this case, the agreement between Petronas and Shell MDS had not been breached. On the contrary, Petronas had complied with the agreement at all material times,” he said.

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Justice Wong said the High Court judicial commissioner Arziah Apandi could only exercise her discretion to grant the interlocutory mandatory injunction (supply of natural gas) if Shell MDS could prove an ”unusually strong and clear” case against Petronas.

“We are not satisfied that the first respondent (Shell MDS) had satisfied the high threshold of an ‘unusually strong and clear’ case against the appellant (Petronas) which could justify the High Court to grant the injunction,” he said.

The Court of Appeal judge also said the grant of the injunction to continue to supply gas in this case had financially oppressed Petronas and continue to oppress the company financially.

“This is because the appellant was and continues to be compelled by the interlocutory mandatory injunction to supply natural gas without any payment.

“It is to be emphasised that the appellant had and continues to be deprived of substantial payments of about RM80 million a month since the High Court’s ad interim mandatory injunction given on Dec 19, last year,” he said.

Justice Wong said it was not disputed that the interlocutory mandatory injunction to supply natural gas and the interlocutory mandatory injunction to stop proceeds of the bank guarantee had altered the status quo to Petronas’ financial detriment.

On Monday, the Court of Appeal three-member bench, comprising Justices Datuk Azimah Omar, Datuk Ismail Brahim and Justice Wong, allowed Petronas’s appeal to set aside the interim injunction obtained by Shell MDS, which allowed the company (Shell MDS) to stop monthly payments for gas supplied by Petronas to Shell MDS at its Bintulu facility in Sarawak.

The court also lifted a separate High Court injunction that had required Petronas to continue supplying gas to Shell MDS and allowed a bank guarantee to be withheld during the period.

The bench, led by Justice Azimah, also ordered Shell MDS to pay Petronas the outstanding amounts owed from August 2024 until Oct 5 this year, with payment due by Oct 6.

Shell MDS had withheld payment due to concerns over receiving two invoices – one from Petronas and another from Petroleum Sarawak (Petros), fearing it might have to make double payments while the jurisdictional dispute between the two companies was being resolved.

The injunction granted by the High Court was based on Shell MDS’s involvement in two separate gas supply agreements – one with Petronas (signed on July 17, 2020), and another with Petros (signed on Aug 16, 2024).

--BERNAMA