PUTRAJAYA: The Court of Appeal has ruled that Petroliam Nasional Berhad (Petronas) did not breach its gas supply agreement with Shell MDS (Malaysia) Sdn Bhd.
Justice Datuk Wong Kian Kheong stated that the High Court erred in granting an injunction that compelled Petronas to continue supplying gas.
He explained that the High Court Judicial Commissioner failed to consider Section 53 of the Specific Relief Act 1950, which required Shell MDS to prove a breach of the signed agreement.
“In this case, the agreement between Petronas and Shell MDS had not been breached,” Justice Wong said in his broad grounds.
He added that Petronas had complied with the agreement at all material times.
Justice Wong noted that the High Court judicial commissioner could only grant the injunction if Shell MDS proved an unusually strong and clear case against Petronas.
The Court of Appeal was not satisfied that Shell MDS had met this high threshold to justify the injunction.
Justice Wong also stated that the injunction had financially oppressed Petronas by compelling it to supply natural gas without payment.
Petronas has been deprived of substantial payments of about 800 million ringgit a month since the High Court’s interim injunction on December 19 last year.
It was not disputed that the injunction altered the status quo to Petronas’ financial detriment.
A three-member bench comprising Justices Datuk Azimah Omar, Datuk Ismail Brahim, and Justice Wong allowed Petronas’s appeal to set aside the interim injunction.
The court also lifted a separate High Court injunction that had required Petronas to continue supplying gas to Shell MDS.
The bench ordered Shell MDS to pay Petronas the outstanding amounts owed from August 2024 until October 5 this year.
Payment for the outstanding amounts is due by October 6.
Shell MDS had withheld payment due to concerns over receiving invoices from both Petronas and Petroleum Sarawak (Petros).
The company feared it might have to make double payments while a jurisdictional dispute between Petronas and Petros was being resolved.
The High Court injunction was based on Shell MDS’s involvement in two separate gas supply agreements.
Shell MDS signed one agreement with Petronas on July 17, 2020, and another with Petros on August 16, 2024. – Bernama