Kuala lumpur: The Court of Appeal has ruled that Petroliam National Berhad (Petronas) did not breach its gas supply agreement with Shell MDS (Malaysia) Sdn Bhd, determining that the High Court erred in issuing an injunction that compelled Petronas to continue supplying gas.
According to BERNAMA News Agency, Justice Datuk Wong Kian Kheong stated that the High Court Judicial Commissioner failed to consider Section 53 of the Specific Relief Act 1950, which mandates that Shell MDS must prove a breach of agreement by Petronas. Justice Wong emphasized that the agreement was adhered to by Petronas at all relevant times. He also noted that the High Court judicial commissioner, Arziah Apandi, could only grant the injunction if Shell MDS demonstrated an “unusually strong and clear” case against Petronas.
The Court of Appeal highlighted that the injunction financially oppressed Petronas, compelling it to supply natural gas without payment and depriving the company of substantial payments, amounting to about RM80 million monthly since the High Court’s interim injunction on December 19 of the previous year. It was undisputed that the injunctions had financially disadvantaged Petronas.
On Monday, a three-member bench, including Justices Datuk Azimah Omar, Datuk Ismail Brahim, and Justice Wong, allowed Petronas’s appeal, overturning the interim injunction that permitted Shell MDS to halt monthly payments for gas supplied by Petronas to Shell MDS in its Bintulu facility in Sarawak. The court also lifted another injunction requiring Petronas to continue supplying gas and allowed a bank guarantee to be withheld.
The bench, led by Justice Azimah, ordered Shell MDS to settle outstanding payments owed to Petronas from August 2024 to October 5, with payment due by October 6. Shell MDS had withheld payment due to concerns over receiving invoices from both Petronas and Petroleum Sarawak (Petros), fearing potential double payments amidst an ongoing jurisdictional dispute. The injunction was based on Shell MDS’s involvement in separate agreements with Petronas and Petros, signed in July 2020 and August 2024, respectively.