Original jurisdiction of the Federal Court: Case analysis of Petronas v Kerajaan Negeri Sarawak [Motion No.: BKA-1-01/2026(W)]
- Gavin Jayapal
- 3 days ago
- 5 min read
The facts
Petronas filed a Motion seeking leave to initiate proceedings against the State Government of Sarawak and the Government of Malaysia.
In gist, Petronas seeks leave to obtains orders that several Ordinances and Rules enacted by the State of Sarawak are beyond its legislative competency.
Petronas argues that the Petroleum Development Act 1974 (PDA 1974) grants it absolute rights to petroleum, whether onshore of offshore Malaysia. This was vested with Petronas in 1975.
As consideration, Petronas would pay the Government of Sarawak a fixed cash payment.
The alleged encroachment
Petronas argued that the Government of Sarawak, by enacting several laws, had encroached upon rights that accrued to the Federal Government, under the Federal List. These laws are:
a. The Sarawak Land Code and Sarawak Land (Carbon Storage) Rules 2022;
b. The Sarawak Environment (Reduction of Greenhouse Gasses Emission) Ordinance 2023;
c. The Sarawak Flaring and Venting Rules 2025.
In gist, Petronas argued that these matters come under Item 1 of the Federal List.
As a result of this, Petronas takes the stance that the Sarawak Government has no constitutional power to enact these laws.
The FC’s observations
The FC began by outlining the law. The Applicant would firstly have to satisfy the Court that leave is necessary and that they (Applicant) had an arguable case (Mamat Bin Daud v Government of Malaysia [1986] 2 MLJ 192).
The FC then determined that the challenge against the impugned laws falls “squarely within the exclusive jurisdiction of the Federal Court” (para. 22).
The FC noted that Petronas had been given exclusive rights under the PDA 1974. The various laws enacted would have an effect on the operations of Petronas vis-à-vis the PDA 1974.
Petronas was, in essence, seeking declarations that the laws enacted were unconstitutional as they were enacted beyond the Federal Constitution.
A note on procedure
The procedure governing this process appears in Rule 30 of the Rules of the Federal Court 1995. It provides as follows:
30. Application under Article 4(4) of the Constitution
An application under Article 4(4) of the Constitution for leave to commence proceedings shall be made in accordance with Chapter III of these Rules.
Although the Rule specifies Chapter III, that provision deals with Notices of Appeal (post the grant of leave to appeal). This is, in my limited understanding, inapplicable.
I believe that one has to look at Chapter 2 of the FC Rules 1995, which deals with the Original and Consultative Jurisdiction of the Federal Court. This provides that every suit shall be commenced by Petition. The procedure is generally set-out in Rules 4-29 of the FC Rules 1995.
When one then turns to Article 4(4) of the Federal Constitution, it states:
(3) The validity of any law made by Parliament or the Legislature of any State shall not be questioned on the ground that it makes provision with respect to any matter with respect to which Parliament or, as the case may be, the Legislature of the State has no power to make laws, except in proceedings for a declaration that the law is invalid on that ground or—
(a) if the law was made by Parliament, in proceedings between the Federation and one or more States;
(b) if the law was made by the Legislature of a State, in proceedings between the Federation and that State.
(4) Proceedings for a declaration that a law is invalid on the ground mentioned in Clause (3) (not being proceedings falling within paragraph (a) or (b) of the Clause) shall not be commenced without the leave of a judge of the Federal Court; and the Federation shall be entitled to be a party to any such proceedings, and so shall any State that would or might be a party to proceedings brought for the same purpose under paragraph (a) or (b) of the Clause.
The FC observed further that only the Federal Court would have exclusive and original jurisdiction to hear such disputes. This was determined in Yeoh Tat Hong v GOM [1973] 2 MLJ 86 and Iki Putra v Kerajaan Negeri Selangor [2021] 2 MLJ 323.
The limited original jurisdiction of the FC
The original jurisdiction of the FC is limited. It is to only be exercised for competency challenges. The distinction between a competency and inconsistency challenge was explained by the FC in Rethana v GOM [1984] 2 MLJ 52:
Under our Constitution, the Federal Court is an appellate Court and its exclusive original jurisdiction is limited. In my opinion, this particular original jurisdiction of the Federal Court conferred by Article 128(1)(a) read with section 45 of the Courts of Judicature Act 1964 should be strictly construed and confined to cases where the validity of any law passed by Parliament or any State Legislature is being challenged on the ground that Parliament has legislated on a matter outside the Federal List or Concurrent List; or a State Legislature has enacted a law concerning a matter outside the State List or the Concurrent List as contained in the Ninth Schedule to the Federal Constitution. To extend the exclusive original jurisdiction of the Federal Court to matters which are not expressly provided by the Constitution would apart from anything else, deprive aggrieved litigants of their right of appeal to the highest Court in the land.
The distinction was also concisely captured in Iki Putra v Kerajaan Negeri Selangor [2021] 2 MLJ 323:
[28] The words used in art 4(3) and 128(1)(a) of the FC are that the relevant Legislature (Federal or State) ‘has no power’ to make laws which is another way of saying that they are ‘incompetent’ to do so. Where a law is made incompetently it would be void and invalid and liable to be struck down under art 4(1).
[29] In this regard, the phrases ‘inconsistency challenge’ and ‘incompetency challenge’ are purely convenient nomenclature serving as a means to identify the procedure to mount the different challenges given their nature. As identified earlier, the High Courts have jurisdiction to hear inconsistency challenges while incompetency challenges are reserved for the original jurisdiction of the Federal Court. The original jurisdiction of this court is exclusive simply because of the gravity of the allegation that the relevant legislature has no power to make that law.
In other words, the High Court has the power to declare a law null and void (on the basis that it runs contrary to the Federal Constitution). However, where a law is enacted that bypasses the Federal/State List, only the original jurisdiction of the Federal Court can declare said law null and void.
Watch this space for an update vis-à-vis the decision pertaining to the substantive petition.
GAVIN JAYAPAL
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