INTRODUCTION

Reference is made to the Malaysia Marine and Heavy Engineering Holdings Berhad (“MHB” or “the Company’s”) announcements dated 18 March 2019, 6 August 2021 and 30 September 2021 as well as the material litigation updates in the Note B8 of the Quarterly Results duly announced on 26 April 2019, 2 August 2019, 24 October 2019, 12 February 2020, 29 April 2020, 23 July 2020, 27 October 2020, 9 February 2021, 28 April 2021, 30 July 2021, 2 November 2021, 11 February 2022, 20 May 2022 and 17 August 2022.

THE DISPUTE

The Kebabangan ("KBB") Field is located about 135km NW of Kimanis, Sabah.  The KBB Platform was developed as a hub for the development of deepwater oil and gas assets in the North Sabah area.

MHB’s wholly-owned and major subsidiary, Malaysia Marine and Heavy Engineering Sdn Bhd (“MMHE”) was to carry out and complete certain works for Kebabangan Petroleum Operating Company Sdn Bhd (“KPOC”), including to construct, engineer, procure, fabricate, inspect, test & pre-commission, load-out and sea-fastening of the KBB Topsides and associated appurtenances (“Contract”). The works were completed in June 2014.

On 13 March 2019, MMHE received a notice of arbitration from KPOC. KPOC claimed that MMHE was in breach of contract in respect of matters relating to supply of certain valves. The valves procured by MMHE were claimed to be defective and that KPOC suffered substantial loss and damage.

THE FINAL AWARD AND THE APPLICATIONS TO THE HIGH COURT

By way of the Final Award dated 23 July 2021 that was made available to MMHE on 3 August 2021 (“Final Award”), the Arbitral Tribunal ordered that MMHE shall pay KPOC the following:-              

1. The sum of RM17,241,178 as damages for the expenses incurred by KPOC for assessment, procurement and replacement of valves in the period of 2016 to 2019, together with interest at the rate of 5% per annum from 11 October 2019 to the date of payment;  
2. The sum of RM9,820,770 as damages suffered by KPOC in having to procure 1,365 valves and install 1,454 valves in the future, together with interest at the rate of 5% per annum from 11 October 2019 till the date of payment; and
3. The sum of RM1,029,167 for its legal fees and expenses. 

In the Final Award, the Arbitral Tribunal dismissed all of KPOC’s claim for loss of revenue in the sum of RM28,030,906.

On 30 September 2021, MMHE filed an application before the Kuala Lumpur High Court (“KLHC”) to set aside the Final Award pursuant to Section 37 of the Arbitration Act 2005, amongst others, on grounds that there was a breach of the rules of natural justice in connection with the making of the Final Award. KPOC, in this regard, filed an application for leave to register and enforce the Final Award as a Judgment of the High Court. (collectively, “Applications”).

OUTCOME OF THE APPLICATIONS

MMHE has been informed today by its solicitors, Messrs Mohanadass Partnership that the KLHC decided and disposed the Applications on 30 August 2022 in MMHE’s favour whereby the KLHC allowed MMHE’s application to set aside the Final Award with costs and further, dismissed KPOC’s application to register and enforce the Final Award, also with costs to MMHE. 

This announcement is dated 30 August 2022.