KUALA LUMPUR, Jan 13 — Petronas’s decision to seek a Federal Court ruling on the regulatory framework governing its operations in Sarawak is a standard legal process for resolving constitutional disputes between federal and state authorities, not a political confrontation, according to a law lecturer.
Hafiz Hassan of Multimedia University drew parallels with other federations like Australia, where apex courts are used to settle such conflicts.
“Conflicts do happen. When they do, they are usually resolved through the legal system,” he said.
“Let’s respect the process.”
Earlier this week, Petronas filed a motion in the Federal Court seeking a definitive ruling on the legal position of the petroleum sector in Sarawak, naming both the federal and state governments as respondents.
The national oil company stated the move was to ensure it could operate in full compliance with the law after years of unresolved negotiations.
The legal action comes against the backdrop of Sarawak’s long-standing push for greater control over its energy resources, including aspirations for its state-owned entity, Petroleum Sarawak Bhd (Petros), to play a more central role in the industry.
Hafiz explained that the legal principle at stake is similar in both Malaysia and Australia.
In both federations, when a state law is inconsistent with a federal law, the federal law prevails.
He cited a recent Australian High Court case where state tax laws were found invalid because they conflicted with federal laws governing international tax agreements.
“In simple words, if a state parliament and the federal parliament pass conflicting laws on the same subject, then the federal law overrides the state law,” he said.
Similarly, he noted, Article 75 of Malaysia's Federal Constitution provides that federal law overrides any conflicting state law.
Petronas is now asking the Federal Court to clarify this framework in the context of its Sarawak operations.
Analysts have cautioned that while Sarawak’s ambitions are understandable, any restructuring must avoid disrupting national energy security and Petronas’s financial stability, which underpins federal revenues.
Hafiz concluded that seeking a ruling from the nation's highest court is how federations deal with difficult questions.
“You go to the apex court, you get clarity, and everyone moves forward on a firmer legal footing,” he said, adding that a definitive determination could provide long-term certainty for all stakeholders, including investors and consumers.
