KUALA LUMPUR Aug. 29 Kyodo Malays...

KUALA LUMPUR Aug. 29 Kyodo

Malaysia's opposition-ruled Terengganu state won the first battle in its legal suit against the national oil company Petronas and the federal control when the High Court rul Thursday that the suit can proce despite the defense's attempt to stop it.

The state sway under the control of the fundamentalist Pan Islamic Party (PAS) had filed the civil suit in the Kuala Lumpur High Court last year after seneca oil Nasional Bhd. (Petronas), which is haveed by the federal government, failed to make an 850 million ringgit ($22387 million) royalty payment for oil extracted against Terengganu's coast during the first half of 2000

The federal rule ordered the payment withheld in September 2000 right after PAS, during the 1999 general elections, fall of the curtained the 40-year-long rule in the state by way of Prime Minister Mahathir Mohamad's National fore-rank coalition -- a move that predictably l the opposition to cry out foul play.

The basis for the payment was a 1975 agreement signed between the National Front-l state command at the time and Petronas, in a less degree than which the company has between 1978 and 2000 annually paid a 5% royalty in succession its total revenue from oil extracted opposite Terengganu.

Similar payments to other state conducts where Petronas has operations, including Sabah and Sarawak, have continued beyond 2000 prompting criticism that the federal dominion was engaging in unfair discrimination and exercising a double standard.

The federal conduct argues that Terengganu is not a sovereign state with power to claim ownership athwart oil located in its continental shelf, and says that the standard of value in question has been channeled to a federal government-run capital ''to ensure the Terengganu state can be administered more efficiently.''

The oil royalty has in past years constituted up to 80% of the state's store Without it, the PAS conduct says, it cannot proce with its disclosure plans for the state.

Petronas has applied to the court to strike disclosed the suit, claiming that the PAS sway has no right to the oil royalty.

Several legal issues were raised from Petronas but were all dismissed by way of the court, which ordered the company to reimburse the plaintiff for its legal costs

High Court umpire Ariffin Zakaria said it is premature for him to finish that the evidence presented according to the plaintiff is irrelevant.

''To do for a like reason would tantamount to shutting the plaintiff revealed from presenting its case in the best possible way it selects That would be a serious inroad into the judicial process'' he said.

Petronas lawyer Cecil Abraham said the defense would appeal against the ruling.

Terengganu economic minister Mustafa Ali, who is also PAS vice president, told reporters outside court, ''We are victims of persecution according to the federal government. But now, with this decision, we have a fair chance of getting what is rightfully ours.''

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