N10272
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS NO. 91 OF 2023 (IECMS)

BETWEEN:

ARRAN ENERGY (NIUGINI) PTY LTD
(ACN 143 361 460) as Operator and Interest holder of PDL 10
Plaintiff

V

HON. KERENGA KUA, OL, MP, Minister for Petroleum
First Defendant

AND

THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Second Defendant

Waigani: Anis J
2023:  12 & 26 May

INTERIM INJUNCTION – preliminary issues raised by the Court – whether agreement or Oil and Gas Act 1998 applies in the event of a dispute – whether the Court’s jurisdiction ousted by clauses 19 and 23 of the Agreement – consideration and ruling
PRACTICE AND PROCEDURES – whether preliminary issues that impinge on substantive issues should be dealt with as preliminary matters or whether they should be left for trial proper – consideration – ruling

Cases Cited:
John Momis and Ors v. Attorney General, NEC and The State [2000] PNGLR 109
Gabriel Yer v. Peter Yama (2009) SC990
Steven Bagari v. James Marape (2018) N7412
Dent v Thomas Kavali [1981] PNGLR 488 at 490
Dent v Thomas Kavali [1982] PNGLR 150
Avia Aihi v The State [1981] PNGLR 81 at 91
National Capital District Interim Commission -v- Bogibada Holdings Pty. Ltd and Continental Trading Pty. Ltd [1987] PNGLR 135

Counsel:
M Tusais, for the Plaintiff
J Holingu, for the First Defendant
E Bua, for the Second Defendant 

DECISION

26th May, 2023
1.	ANIS J:  This matter was referred to the Commercial Court by His Honour the Deputy Chief Justice on 28 April 2023, that is, after His Honour had partially dealt with a notice of motion filed by the plaintiff (i.e., filed on 11 April 2023).  The orders made include the following:
“1.	The Court grants interim restraining orders in terms of reliefs 2 & 3 in the notice of motion filed on 12 April 2023 but for those orders to return on Friday 5 May 2023.
2.	The matter is adjourned to return before Anis J on 5 May 2023 at 9:30am or as His Honour may direct.
3.	On the next return date, the parties shall appear well prepared to address the Court on, amongst other questions: (a) In the event of a conflict between the Agreement the subject of these proceedings and the Oil & Gas Act, which of them takes priority? and (b) whether this Court’s jurisdiction has been ousted having regard to the particular wording and hence intent of parties in terms 19 and 23 of the Agreement?
……”
2.	Terms 2 & and 3 of the interim restraining orders read:
“(2)	…… that the Notice of Intention to Cancel Petroleum Development License No. 10 and Pipeline License No. 10 dated 27 February 2023 is stayed pending determination of the proceeding or further order of the court.
(3)	…… that the Defendants, their officers, agents and servants be restrained from relying on the Notice of Intention to Cancel Petroleum Development License No. 10 and Pipeline License No. 10 dated 27 February 2023 is stayed pending determination of the proceeding or further order of the court.”
3.	The matter returned before me for hearing on 12 May 2023.  I reserved my ruling thereafter to a date to be advised.
4.	This is my ruling.
CLAIM
5.	The plaintiff filed this proceeding on 12 April 2023.  It seeks the following relief:
“1.	A declaration that pursuant to section 185 of the Oil & Gas Act 1998, clause 23 of the Stanley Gas Agreement requires the Defendants to exercise any powers given by section 138 of the Oil & Gas Act 1998 in accordance with the process set out in clause 23 of the Stanley Gas Agreement.
2.	A declaration that the Notice of Intention to Cancel Petroleum Development License No. 10 and Pipeline License No. 10 dated 28 February 2023, issued by the First Defendant purportedly pursuant to section 138 of the Oil & Gas Act 1998 without complying with clause 23 of the Stanley Gas Agreement, is unlawful and invalid.
3.	An order for permanent injunctions restraining the Defendants, and their officers, servants, and agents from relying on and/or taking any action relating to the Notice of Intention to Cancel Petroleum Development License No. 10 and Pipeline License No. 10 dated 28 February 2023.
4.	An order that the Defendants pay the Plaintiff’s costs of this proceeding on a solicitor and own client basis.”
6.	The plaintiff holds 2 licenses under the Oil and Gas Act 1998 (OG Act), the first is a petroleum development license, that is, Petroleum Development License No. 10 (PDL10), and the second is a pipeline license, that is, Pipeline License No. 10 (PL10).  The plaintiff’s interest in the oil and gas industry in Papua New Guinea includes this project known as the Stanley Gas Project or Gas Fields which is situated in the Western Province.  The 2 licenses were issued to the plaintiff over that area.  The plaintiff and the second defendant also have in place a written contract called the Stanley Gas Agreement (SGA/Project) that captures the terms and conditions of the parties’ interests in the Project.
PRELIMINARY ISSUES
7.	The preliminary issues queried by the Court are stated above.  
8.	I note the submissions of the parties which I have considered in detail.
9.	However, my preliminary view is this.  The questions (a) In the event of a conflict between the Agreement the subject of these proceedings and the Oil & Gas Act, which of them takes priority? and (b) whether this Court’s jurisdiction has been ousted having regard to the particular wording and hence intent of parties in terms 19 and 23 of the Agreement? appear to impinge or fall into the purview of triable issues which may be a matter for the trial Court to determine.  The primary relief I note seeks the Court’s interpretation of s185 of the OG Ac, that is, whether the section permits the State to exercise discretion to expound on various terms and conditions when entering into an agreement such as under s184 with a developer such as the plaintiff, and if that occurs, whether the terms and conditions of the agreement shall be binding, pursuant to s 185 of the OG Act.
10.	I note in the submissions that the parties are at “loggerheads” on the application of s.185.  They dispute whether the section applies prior to or before the signing of an agreement under s184.  Regardless of that, they also dispute whether clauses of an agreement (i.e., an agreement entered under s184) that are contrary to the provisions of the OG Act or s138, are null and void.  
11.	I find these arguments valid, but in my view, I find that they should be left for the trial Court to determine.  They should not, in my view, be determined as an interlocutory or preliminary matter.  See cases:  John Momis and Ors v. Attorney General, NEC and The State [2000] PNGLR 109, Gabriel Yer v. Peter Yama (2009) SC 990 and Steven Bagari v. James Marape (2018) N7412.
12.	Order 4 Rule 49(9) of the National Court Rules (NCR) states:
“9.  Motions for interlocutory matters only.
Except as otherwise expressly provided in the National Court Rules, Motions shall be for relief on interlocutory matters only and not for the substantive relief claimed in the originating process.”
13.	Having stated the above case authorities and rules, I note that this case is quite different in the sense that it was the Court that had raised the 2 preliminary issues for the parties to address at an interlocutory stage or at the time when the Court granted the interim restraining orders on 28 April 2023.  So, should the same principle (i.e., to leave substantive issues for the trial Court to determine and to refrain from determining them at an interlocutory setting) apply to the present case?  I would answer that in the affirmative.  Order 4 Rule 49(5)(ii)(f) of the NCR sates:
“(f)  A party shall not and the judge shall not make any order in terms of the substantive relief sought in the originating process.”
14.	Although the rule expressly applies to “Urgent Ex parte Applications”, when read together with Order 4 Rule 49(9), they complement each other.  Therefore, in situations such as the present (where the Court, premised on its own issued directions is faced with a situation where it may be considering substantive issues for trial), the Court may, premised on Order 4 Rule 49(9) and Rule (5)(ii)(f), refrain itself from making findings or orders but instead reserve the issues for the trial Court to determine.  
15.	Having considered the 2 questions in detail, I am minded not to deal with them as preliminary matters now but reserve them as issues for trial.
COURT’S GENERAL JURISDICTION
16.	Apart from that, the parties also contest whether the National Court has jurisdiction to grant declaratory and permanent injunctive orders as is being sought by the plaintiff.  The argument is made premised on the special nature of the matter, that is, premised on what the parties had entered into, which is the SGA.
17.	The general answer to that is, “yes, this Court has original jurisdiction to make declaratory orders or orders in the nature of prerogative writs”. The power is conferred under s155(4) of the Constitution.  See cases:  Dent v Thomas Kavali [1981] PNGLR 488 at 490, Dent v Thomas Kavali [1982] PNGLR 150, Avia Aihi v The State [1981] PNGLR 81 at 91, National Capital District Interim Commission -v- Bogibada Holdings Pty. Ltd and Continental Trading Pty. Ltd (1987) P.N.G.L.R. 135.
18.	With respect, I had difficulties following the defendants’ submission on this point, but I think the confusion may be explained as follows.  The defendants refer to the contents of the SGA and say that the parties are bound by its terms, and when it comes to disputes, they say the SGA states how the dispute should be resolved internally through arbitration, thus their argument on want of jurisdiction of the Court.  The terms of the agreement in my view are there and may be a matter for consideration at some point in time.  But that does not, in my view, prevent a party from asserting its primary right or interest and from coming to the Court to seek orders of this nature.  And I note that the proceeding appears to have an ultimate aim or purpose, namely, to enforce a procedural term(s) of a binding agreement (which is the SGA) on or re Cancellation.  
19.	Section 10 of the OG Act states:
“10.  Jurisdiction of courts.
(1)  The National Court of Papua New Guinea is vested with jurisdiction in all matters arising under this Act, including all matters arising under the provisions applied by Section 9, and shall have jurisdiction to hear and determine all actions, suits, claims, demands, disputes, prosecutions and questions which may arise under this Act or those provisions.”
20.	I also note that the SGA is binding upon the parties which is not contested.  Clause 19 therein deals with arbitration of disputes that may arise from the SGA.  Of importance for this purpose, in my view, is clause 19.1.  It reads:
“19.1  Mutual Discussions
The parties shall endeavour to resolve by mutual agreement any disputes, questions or differences arising out of or related to this Agreement or the terns of this Agreement, including its construction, meaning, operation or effect or concerning the rights, duties or liabilities of the Parties, or concerning the breach, termination or validity hereof (a “Dispute”).  Failing such resolution within sixty days after giving all Parties written notice of the Dispute, any Party may submit the Dispute to arbitration pursuant to this Clause 19.”
(Underlining mine)
21.	Evidence adduced, and in particular the affidavit of Gerard Manggal (filed on 12 April 2023) who is the Country Manager for the plaintiff, shows that the plaintiff had written to the defendants on 17 March 2023 requesting ‘an open discussion’.  However, and again premised on Mr Manggal’s evidence, no response had been received or was forthcoming from the defendants.  Subsequent attempts to negotiate in correspondences by the plaintiff to them have also been to no avail.  Mr Manggal deposes that as at 11 April 2023, no responses were received from the defendants thus on 12 April 2023, the plaintiff filed this court proceeding.
22.	There appears to be prima facie evidence that clause 19.1 may have been violated thus the plaintiff is seeking orders to, amongst others, enforce or seek clarity.  On the face of the clause, it appears to mean that both parties are required to endeavour to resolve a dispute by mutual agreement.  If that is the case and if there is a violation (meaning one party fails to co-operate), then how else will the concerned party like the plaintiff enforce that?  It cannot wait for arbitration because arbitration, according to clause 9, appears to say that it (arbitration) may only be invoked after the parties’ mutual agreement to resolve the dispute has failed.  Again, and without diving deep into interpretation of clauses of the SGA, clause 19.1 appears to suggest that arbitration is not a mandatory option, and also but perhaps most importantly, that arbitration may be invoked as an option only if the mutual agreement by the parties to try to resolve their dispute fails.  In the present case, there is prima facie evidence of want of endeavour by the defendants to resolve the dispute.  There is also prima facie evidence of want of any mutual agreement reached between the parties to try to resolve the matter as required by clause 19.1.  
23.	Premised on these reasons and preliminary assessments, I dismiss the submissions by the defendants regarding want of jurisdiction of the National Court on the matter.
MODE OF PROCEEDING
24.	Premised on my findings, I also dismiss arguments that challenge the mode of this proceeding.  The plaintiff also had the right to choose which mode of proceeding it wishes to use, that is, based or premised on its strategy or the circumstances of its case.
SUMMARY
25.	In summary (i), I refuse to make determination in regard to the 2 preliminary issues, and (ii), I find that the National Court does have jurisdiction to make a determination on the substantive matter. 
WAY FORWARD
26.	Unless there will be further interlocutory process or matters to be heard, the matter should be set down for hearing.
27.	I also note that the Court had also issued directions for parties to settle, on 28 April 2023.  I would be happy to hear whether the parties have already discussed possible settlement, and if not, their positions regarding the same.  If there is a real chance for settlement to occur, then this Court’s time should not be wasted, and parties should immediately engage with that option.  The parties should draft consent orders in that regard to hand up to the Court to endorse.

The Court orders accordingly

________________________________________________________________
Dentons:	Lawyers for the Plaintiff
Holingu:	Lawyers for the First Defendant
Solicitor General’s Office:	Lawyers for the Second Defendant