Chuah said disagreements between Putrajaya and states like Sarawak are a normal part of federalism and can even be useful. “They help clarify the rules of who controls what,” he said.
However, problems start when the existing legal frameworks are no longer seen as fair or legitimate, and when disputes are tied to identity politics.
“This is when they stop being healthy debates and instead become destabilising,” Chuah added.
PDA and emergency laws
Chuah said questions over the validity of the Petroleum Development Act 1974 (PDA) stem from its enactment during an Emergency, but stressed that laws passed under such circumstances do not automatically become invalid subsequently.
“The more nuanced issue is that the PDA changed the territorial sea boundaries of the states,” he said, adding that such a move would normally require the consent of the states and the Conference of Rulers.
“Whether the Emergency rules bypassed that requirement remains debatable.”
Chuah warned that if that argument was sufficient to invalidate the PDA, many other laws still in force today would also be called into question.
Petronas versus Petros
Both Sarawak and Putrajaya have arguments to justify their respective claims to oil and gas on Malaysia’s continental shelf, said Chuah.
He said the fact that the Oil and Mining Ordinance 1958 (OMO), a state enactment, was never repealed gives Sarawak some basis for arguing that it can regulate oil and gas.
“Petronas could be legally obliged to comply with both state and federal laws, unless the courts decide otherwise,” he said.
“On the other hand, by being privy to the making of the PDA, Sarawak may have surrendered its rights.”
According to Chuah, Putrajaya could then argue that the OMO has by implication been repealed or become inapplicable.
“Alternatively, the OMO has been supervened by the PDA,” he said.
Chuah also commented on the Shell MDS case, in which the company was caught between two demands – one from Petronas and one from Petros.
“Shell wasn’t sure who the rightful aggregator was, so it withheld payments until the courts made it clear,” he said.
The High Court initially allowed Shell to withhold the money pending disposal of the case, but the Court of Appeal later reversed this decision, ordering Shell to pay Petronas for gas supplied.
Bigger picture
Chuah said Malaysia is not the only country experiencing strains in federal-state ties, pointing to countries like the US, Germany, Canada and even the European Union (EU).
He said the Federal Constitution actually anticipates these tensions and provides room for “legal pluralism”, rather than “harmonisation or unification”.
“This system was ahead of its time, and it still offers a sound framework for managing disputes,” he said.