By Daniel John Jambun
Borneo’s Plight in Malaysia Foundation refers to the statement by former federal minister Khairy Jamaluddin that legal clarity must prevail over political considerations in the dispute between Petroliam Nasional Berhad, commonly known as Petronas, and the Sarawak Government over the control and regulation of Sarawak’s oil and gas resources.
BoPiMaFo agrees with the basic principle that constitutional disputes must ultimately be determined according to law and not through political intimidation, administrative pressure or economic coercion.
The petroleum industry requires certainty. Investors, operators, purchasers and the people of Sarawak are entitled to know which constitutional authority, legislative regime and regulatory arrangements lawfully govern petroleum and natural gas activities within Sarawak.
However, legal clarity must be complete and impartial.
It cannot mean placing Sarawak’s laws under judicial scrutiny while treating the Petroleum Development Act 1974, the Continental Shelf Act 1966, the Petroleum Mining Act 1966 and Petronas’s claims as automatically valid and beyond constitutional examination.
THE FEDERAL COURT HAS NOT DECLARED PETRONAS THE WINNER
The Federal Court’s decision to grant Petronas leave to commence its constitutional challenge against several Sarawak laws was not a final determination that Petronas owns Sarawak’s petroleum resources or that Sarawak’s legislation is unconstitutional.
The decision merely permits the substantive constitutional questions to proceed to a full hearing.
Sarawak has also initiated proceedings questioning the constitutional validity and continued application to Sarawak of three major federal petroleum laws: the Petroleum Development Act 1974, the Continental Shelf Act 1966 and the Petroleum Mining Act 1966.
Both sides of the constitutional dispute must therefore be examined.
The courts must determine not only whether the Sarawak Legislative Assembly possessed the constitutional competence to enact the disputed State laws, but also whether Parliament possessed the constitutional authority to enact and apply the disputed federal petroleum laws in a manner that diminished Sarawak’s pre-existing territorial, legislative and proprietary rights.
That is the meaning of genuine legal clarity.
THE PDA 1974 CANNOT BE TREATED AS THE STARTING AND ENDING POINT
It would be constitutionally unsatisfactory to begin with the assumption that the Petroleum Development Act 1974 is unquestionably supreme and then ask only whether Sarawak’s subsequent laws conflict with it.
The prior and more fundamental question is whether the PDA 1974 was itself constitutionally enacted and lawfully applied to Sarawak for the purpose of vesting ownership of petroleum belonging to Sarawak in a federal corporation.
Petroleum situated within the territory of a State is closely connected to land, natural resources, territorial jurisdiction and the constitutional division of legislative powers.
It must therefore be determined whether Parliament possessed the necessary legislative competence to transfer such rights without a request from, or the constitutionally required consent of, the Sarawak Legislative Assembly.
It has been reported that Sarawak’s legal position includes the argument that Parliament enacted the PDA 1974 without a request from the Sarawak Legislature under Article 76(1)(c) of the Federal Constitution.
This issue cannot be brushed aside merely by repeatedly declaring the PDA 1974 to be the national petroleum framework.
A federal statute does not become constitutionally unquestionable simply because it has been applied for many years.
Longevity is not a substitute for constitutional authority.
SARAWAK’S PRE-MALAYSIA RIGHTS MUST BE IDENTIFIED FIRST
Before deciding whether Sarawak has exceeded its powers, the courts must first identify the territorial, legislative and proprietary rights Sarawak possessed immediately before Malaysia Day on 16 September 1963.
The relevant constitutional inquiry must include:
Whether Sarawak’s pre-Malaysia petroleum and territorial laws continued in force after Malaysia was formed;
whether Sarawak’s territorial boundaries extended to its continental shelf and offshore resources;
whether those boundaries or resource rights were ever lawfully altered;
whether the constitutionally required consent was obtained for any alteration;
and whether subsequent federal legislation could lawfully extinguish or transfer those rights without Sarawak’s constitutional participation.
Sarawak did not enter Malaysia as an empty territory possessing no laws, boundaries, assets or governmental authority.
It entered Malaysia with its own Constitution, Legislature, Government, territorial jurisdiction, laws and natural resources.
The formation of Malaysia did not automatically convert every pre-existing Sarawak right into federal property.
Any claim that those rights were later transferred or diminished must be supported by clear constitutional authority and lawful consent.
THE 1975 VESTING ARRANGEMENTS MUST ALSO BE EXAMINED
Petronas relies upon the PDA 1974 and the vesting instruments and cash-payment arrangements executed with the petroleum-producing States in the 1970s.
However, the existence of signed documents does not conclude the constitutional inquiry.
The courts and the people of Sarawak are entitled to know:
Who authorised the Sarawak Government to execute the vesting instrument;
whether the Sarawak Legislative Assembly debated and approved the permanent transfer of ownership;
whether the signatories possessed the constitutional capacity to surrender territorial or proprietary rights belonging to the State;
whether the instrument transferred ownership absolutely or merely established an administrative arrangement for national petroleum development;
and whether an executive agreement could lawfully override the Federal Constitution, Sarawak’s constitutional powers or the foundational safeguards associated with the formation of Malaysia.
No State executive should be presumed to possess unlimited authority to permanently surrender the territory, natural resources or constitutional powers of future generations without clear legislative and constitutional authorisation.
THIS IS NOT MERELY A COMMERCIAL DISPUTE
Khairy is correct that commercial certainty is important, but the dispute cannot be reduced to the operational convenience of the petroleum industry.
Petronas is wholly owned by the Federal Government, while Petroleum Sarawak Berhad, or Petros, is owned by the Sarawak Government.
The litigation therefore concerns the distribution of constitutional authority between the Federation and Sarawak.
It concerns federalism.
It concerns territorial jurisdiction.
It concerns the ownership and control of natural resources.
Most importantly, it concerns whether the rights Sarawak brought into Malaysia could subsequently be diminished through ordinary federal legislation and executive instruments without the free and constitutionally valid consent of Sarawak.
An analysis by the ISEAS–Yusof Ishak Institute has similarly observed that the dispute extends beyond the courtroom and carries wider consequences for federal–State relations and the balance of power within Malaysia.
The court’s decision must be based on law, but the constitutional history that produced the Federation cannot be erased from that law.
POLITICS MUST NOT CONTROL THE COURT — BUT POLITICAL HISTORY CANNOT BE ERASED
Malaysia was itself established through political negotiations that were given legal and constitutional effect.
The Malaysia Agreement 1963, the Malaysia Act 1963, the Inter-Governmental Committee Report and the special constitutional safeguards for Sabah and Sarawak were not created in a historical vacuum.
They formed part of the foundational bargain upon which Sabah and Sarawak agreed to participate in the formation of Malaysia.
The present dispute must therefore be considered within the complete constitutional history of the Federation and not solely through legislation enacted by the Federal Parliament after Malaysia had already been formed.
Politics must not dictate the judgment.
However, the political and constitutional agreements that created Malaysia are part of the applicable legal history and cannot be dismissed as irrelevant sentiment.
SARAWAK IS NOT ASKING TO BE PLACED ABOVE THE LAW
Sarawak is not asking to be exempted from the Federal Constitution.
It is asking the courts to determine the true limits of federal legislative power under that Constitution.
It is asking whether federal petroleum legislation was validly extended to Sarawak.
It is asking whether its pre-existing territorial and resource rights remained protected after Malaysia was formed.
It is asking whether Petronas’s claim to exclusive ownership rests upon a constitutionally valid foundation.
These are not unreasonable, emotional or separatist questions.
They are legitimate constitutional questions that should have been conclusively answered decades ago.
THE DECISION WILL ALSO HAVE CONSEQUENCES FOR SABAH
Although the immediate proceedings concern Sarawak, the constitutional principles decided by the Federal Court may have profound consequences for Sabah.
Sabah must therefore closely study the proceedings, the constitutional arguments, the historical documents and the eventual judgment.
Sabah’s petroleum resources were also purportedly vested in Petronas under the PDA 1974 framework.
The same fundamental questions arise:
Did the Sabah Legislative Assembly lawfully approve the transfer?
What constitutional authority permitted the vesting of Sabah’s petroleum in a federal corporation?
Could the Sabah Cabinet or individual officeholders permanently surrender resources belonging to the State without full constitutional and legislative authority?
Were Sabah’s territorial waters and continental shelf rights lawfully altered?
Sabah must not remain a passive spectator while constitutional principles affecting the natural resources of both Borneo territories are being determined.
LET THERE BE COMPLETE CONSTITUTIONAL CLARITY
BoPiMaFo therefore agrees with Khairy Jamaluddin that legal clarity must prevail.
But that clarity must not be selective.
It must scrutinise Sarawak’s laws and federal laws equally.
It must examine Petros’s regulatory claims and Petronas’s ownership claims equally.
It must examine the constitutional competence of the Sarawak Legislature and the constitutional competence of the Federal Parliament equally.
It must determine the legal effect of the 1975 vesting arrangements, the status of Sarawak’s pre-Malaysia laws and boundaries, and whether any constitutionally required State consent was properly obtained.
The guiding principle should be clear:
Let legal clarity prevail—but let it be complete, impartial and constitutional clarity, not a predetermined assumption that federal legislation and Petronas’s interests are automatically superior to Sarawak’s foundational rights.
Sarawak is not asking to be placed above the law.
Sarawak is asking the law to determine whether the Federal Government and Petronas have remained within it.
Daniel John Jambun, President, Borneo’s Plight in Malaysia Foundation (BoPiMaFo)
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