MISC Integrated Annual Report 2020

42. JOINT ARRANGEMENTS AND ACTIVITIES (CONT’D.) (b) Joint operations Details of the Group’s joint operations are as follows: Effective interest held by the Group (%) Name 2020 2019 Technip MMHE (Malikai) 33 33 Joint Venture Technip MMHE (SK316) 33 33 Joint Venture Technip MMHE (Kasawari) 40 40 Joint Venture Technip MMHE (Malikai) Joint Venture, Technip MMHE (SK316) Joint Venture and Technip MMHE (Kasawari) Joint Venture are unincorporated joint ventures between the subsidiary, MMHE and Technip Geoproduction (M) Sdn. Bhd. to undertake specific engineering, procurement and construction, installation and commissioning projects. 43. SIGNIFICANT EVENTS (a) Material litigation (i) Gumusut-Kakap Semi-Floating Production System (L) Limited (“GKL”) and Sabah Shell Petroleum Limited (“SSPC”) We refer to previous announcements made by MISC Berhad (“MISC or the Corporation”) in respect of the Arbitration Proceedings commenced by the Corporation’s wholly-owned subsidiary, GKL against SSPC. As announced on 10 April 2020, the Arbitral Tribunal has issued its Award on 8 April 2020 (“Award”) which found, among others, as follows: 1) That GKL’s claim in relation to the achievement of Handover Completion under the Contract was rejected and the Arbitral Tribunal decided that Handover Completion did not occur prior to 11 October 2014; 2) In relation to GKL’s claims for Variation Works, GKL was awarded: a. USD222,132,575.60; b. That an amount of USD88,791,006.17 is deducted from USD222,132,575.60 being manpower costs incurred by way of the Variation Works for rectification of defects (which the Tribunal held GKL to be liable for); c. That the remainder sum of USD133,341,569.49 is converted to an Additional Lease Rate and represents a reduction from the Additional Lease Rate awarded by the Adjudication Awards. The new Additional Lease Rate is payable from the date of the Award. The base rate is unaffected by the Award and will continue for the Fixed Term. 43. SIGNIFICANT EVENTS (CONT’D.) (a) Material litigation (cont’d.) (i) Gumusut-Kakap Semi-Floating Production System (L) Limited (“GKL”) and Sabah Shell Petroleum Limited (“SSPC”) (cont’d.) 3) SSPC was awarded the following sums: a. USD236,378,824.46 for defects rectification work (inclusive of USD15,000,000.00 for Liquidated Damages); b. USD88,317,146.13 as a refund for overpayment of the Additional Lease Rate originally awarded in the Adjudication Proceedings for the period of April 2014 to January 2020 due to the reduction of the Additional Lease Rate as set out in Item 2(c) above; c. Applicable interest up to the date of the Award; d. Costs of USD12,746,570.70; e. Interest at 6.65% on the sums awarded in the Award from the date of the Award until payment. 4) SSPC is entitled to set-off the above claims against moneys owed by SSPC to GKL under the Contract, including but not limited to the lease rate. 5) Any GST payable pursuant to the Goods and Services Tax Act 2014 to be accounted by the parties. GKL is advised that it has legal grounds to challenge the Award and on 7 July 2020, GKL has filed the following court applications: (i) an Originating Summons dated 7 July 2020 for setting aside of parts of the Arbitral Award dated 8 April 2020 (“ Setting Aside OS ”); and (ii) a Notice of Application for an injunction to restrain SSPC from setting off the sums that GKL was ordered to pay to SSPC under the Arbitral Award dated 8 April 2020 (“ Injunction NOA ”). Setting Aside OS and Injunction NOA On 6 October 2020, GKL withdrew the Injunction NOA on the basis that a statutory stay of enforcement is automatically imposed on SSPC upon GKL’s application to set aside SSPC’s Award enforcement. On 9 October 2020, the Court gave further directions for Parties’ to exchange affidavits which have been duly exhausted. Parties are prepared for the hearing, pending the outcome of an interim application to transfer the proceedings to another court filed by SSPC. SSPC’s ex-parte application for enforcement of the Award GKL has filed its application to set aside the ex-parte Order on 27 July 2020 and to transfer these proceedings to the same court hearing GKL’s OS. Directions in respect of the setting aside application will be given once the transfer application has been determined. Hearing of GKL’s setting aside application is expected within Quarter 2 2021. 31 December 2020 NOTES TO THE FINANCIAL STATEMENTS 31 December 2020 NOTES TO THE FINANCIAL STATEMENTS 10 462 10 463 /// Leadership / Governance / Financial Statements / Additional Information / Annual General Meeting ////// /// Leadership / Governance / Financial Statements / Additional Information / Annual General Meeting ////// Section Section MISC Berhad / Integrated Annual Report 2020 MISC Berhad / Integrated Annual Report 2020