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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, 30 September 2021 and 30 August 2022 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 the 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:-
- 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;
- 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
- The sum of RM1,029,167 for its legal fees and expenses.
In the Final Award, the Arbitral Tribunal dismissed all of KPOC’s claims 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 the 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”).
On 30 August 2022, the KLHC decided and disposed the Applications 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.
APPEALS TO THE COURT OF APPEAL BY KPOC
The Company wishes to announce that the Company had on 28 September 2022 through its solicitors, Messrs Mohanadass Partnership been served with Notices of Appeal dated 27 September 2022 lodged by KPOC against the Orders of the High Court dated 30 August 2022 (“the Appeal”).
The Company’s position is that the Appeal is without merit and the Company will vigorously defend its position.
OPERATIONAL AND FINANCIAL IMPACT TO THE GROUP
The Company is of the view that the Appeal is not expected to have material financial and operational impact on the Company for the financial year ending 31 December 2022.
Further announcements on any material development of the Appeal will be made to Bursa Malaysia from time to time.
This announcement is dated 29 September 2022.
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