(Kuching, 9th) The Kuala Lumpur High Court has rejected the request by Petroliam Nasional Berhad (PETRONAS) to turn the gas payment dispute between Shell MDS (Malaysia) Sdn Bhd and Sarawak Petroleum Company (PETROS) into a full trial with witness summons and cross-examination, ruling that the case is a "question of legal entitlement" rather than a "factual dispute."
The Sarawak Premier’s Department stated in a press release yesterday that the court rejected Petronas’ application (Document No. 84), which sought to convert the existing "originating summons case" (Case No.: WA-24NCvC-4367-11/2024) into a formal lawsuit.
The court opined that under Order 17 of the 2012 Rules of Court, the originating summons procedure is an independent mechanism intended to resolve disputes over competing claims by a third party. Changing it to a formal lawsuit would fundamentally alter its nature and contravene the intent of the "interpleader" procedure.
The case was initiated by Shell MDS to clarify, in light of both Petronas and PETROS claiming entitlement to payment for natural gas supply, to whom the payment should be made.
Petronas sought to have the case converted into a formal lawsuit on the grounds that it involved complex factual disputes, requiring oral testimony and cross-examination.
However, PETROS and the Sarawak government opposed this application, arguing that the framework under Order 17 is sufficient to handle both factual and legal issues and that changing the nature of the case was unnecessary.
They also pointed out that Petronas’ move would only complicate procedures and delay proceedings.
The court, in its ruling, concurred with Sarawak’s position, noting that the interpleader procedure under Order 17 is specifically designed for neutral parties like Shell MDS facing "double claims."
The court believed that turning the case into a formal lawsuit would make it a completely adversarial proceeding and undermine the purpose of the interpleader action.
In addition, the court ruled that Petronas’ attempt to expand the dispute to a constitutional level was inappropriate, because the scope of Order 17 is limited to deciding to whom payments should be made, rather than opening up a broader range of constitutional or policy questions.
The court noted that the case involves "legal entitlement" and not "factual dispute," and can be resolved via documentary evidence without the need for oral testimony.
The case is scheduled for case management via e-review on November 10, 2025.
According to a report by The Edge Malaysia, federal government counsel Muhammad Muhairi Mohamad Noh, PETROS' counsel Foo Joon Liang, and Sarawak government legal advisor Datuk JC Foong were also present to observe.
Shell MDS, represented by lawyers Christopher Leong and Janet Chai Pei Ying, filed the originating summons in court in November 2024, seeking a ruling on whether gas payments from its Bintulu plant should be made to Petronas or PETROS.
Shell MDS had signed a gas supply agreement with Petronas as early as 2020, and after PETROS was designated the sole gas aggregator in Sarawak in 2024, it signed another supply agreement with PETROS.
Subsequently, Shell MDS obtained a court order to temporarily withhold payments to both parties, while ensuring that gas supplies were not affected. However, Petronas challenged the injunction, and the Court of Appeal later instructed Shell MDS to pay Petronas and to resolve the dispute as soon as possible.
It is understood that Shell MDS owes Petronas nearly RM1 billion, originally due for payment on October 6 (Monday).
Meanwhile, PETROS has also filed a lawsuit against Petronas in the Kuching High Court, seeking to prohibit Petronas from utilizing the bank guarantee provided as security for gas payments, on the grounds that Petronas does not hold a valid operating license under Sarawak law.
The Sarawak Premier’s Department stated in a press release yesterday that the court rejected Petronas’ application (Document No. 84), which sought to convert the existing "originating summons case" (Case No.: WA-24NCvC-4367-11/2024) into a formal lawsuit.
The court opined that under Order 17 of the 2012 Rules of Court, the originating summons procedure is an independent mechanism intended to resolve disputes over competing claims by a third party. Changing it to a formal lawsuit would fundamentally alter its nature and contravene the intent of the "interpleader" procedure.
The case was initiated by Shell MDS to clarify, in light of both Petronas and PETROS claiming entitlement to payment for natural gas supply, to whom the payment should be made.
Petronas sought to have the case converted into a formal lawsuit on the grounds that it involved complex factual disputes, requiring oral testimony and cross-examination.
However, PETROS and the Sarawak government opposed this application, arguing that the framework under Order 17 is sufficient to handle both factual and legal issues and that changing the nature of the case was unnecessary.
They also pointed out that Petronas’ move would only complicate procedures and delay proceedings.
The court, in its ruling, concurred with Sarawak’s position, noting that the interpleader procedure under Order 17 is specifically designed for neutral parties like Shell MDS facing "double claims."
The court believed that turning the case into a formal lawsuit would make it a completely adversarial proceeding and undermine the purpose of the interpleader action.
In addition, the court ruled that Petronas’ attempt to expand the dispute to a constitutional level was inappropriate, because the scope of Order 17 is limited to deciding to whom payments should be made, rather than opening up a broader range of constitutional or policy questions.
The court noted that the case involves "legal entitlement" and not "factual dispute," and can be resolved via documentary evidence without the need for oral testimony.
The case is scheduled for case management via e-review on November 10, 2025.
According to a report by The Edge Malaysia, federal government counsel Muhammad Muhairi Mohamad Noh, PETROS' counsel Foo Joon Liang, and Sarawak government legal advisor Datuk JC Foong were also present to observe.
Shell MDS, represented by lawyers Christopher Leong and Janet Chai Pei Ying, filed the originating summons in court in November 2024, seeking a ruling on whether gas payments from its Bintulu plant should be made to Petronas or PETROS.
Shell MDS had signed a gas supply agreement with Petronas as early as 2020, and after PETROS was designated the sole gas aggregator in Sarawak in 2024, it signed another supply agreement with PETROS.
Subsequently, Shell MDS obtained a court order to temporarily withhold payments to both parties, while ensuring that gas supplies were not affected. However, Petronas challenged the injunction, and the Court of Appeal later instructed Shell MDS to pay Petronas and to resolve the dispute as soon as possible.
It is understood that Shell MDS owes Petronas nearly RM1 billion, originally due for payment on October 6 (Monday).
Meanwhile, PETROS has also filed a lawsuit against Petronas in the Kuching High Court, seeking to prohibit Petronas from utilizing the bank guarantee provided as security for gas payments, on the grounds that Petronas does not hold a valid operating license under Sarawak law.