BUSINESS LAW (LAW 416)

MALAYSIAN LEGAL SYSTEM

Objective
To enable students to understand the sources of law, the Courts system and the administration of justice in Malaysia.

SOURCES OF MALAYSIAN LAW

Meaning of Sources - legal sources i.e the legal rules that make up the law in Malaysia. - Malaysian law can be classified into: written law, unwritten law and Muslim law.

Malaysian Law

Written Law

Unwritten Law

Islamic Law

Federal Constitution

State English Judicial Constitution Law Precedent

Custom

Legislation

Common Law

Equity

Subsidiary Legislation

Written Law
1) 2) 3) 4)

It is the most important source of law. It refers to that portion of Malaysian law which includes the following: The Federal Constitution. The State Constitutions. Legislation. Subsidiary legislation.

Written Law
1) The Federal Constitution The Federal Constitution is the supreme law of the country so that any general law that is inconsistent with the Constitution is, to the extent of the inconsistency, void. Besides laying down the powers of the Federal and State Governments, the FC enshrines the basic or fundamental rights of the individual. These rights written into the Constitution can only be changed by a two-thirds majority of the total number of members of the legislature. This is in contrast to normal laws which can be amended by a simple majority.

Contd
The FC establishes a constitutional monarchy and a federal system of government. Under the federal system, there is a division of legislative powers between the central Parliament and the State Legislative Assemblies. Parliament may make laws for the whole of Malaysia. Art. 74 FC provides that Parliament may make laws with respect to any of the matters enumerated in the Federal List or the Concurrent List. The State Legislature may make laws with respect to any of the matters enumerated in the State List or the Concurrent List.

1. 2. 3. 4. 5. 6.

7.

Federal List External affairs National defence Internal security Civil and criminal law Finance Trade, commerce, industry Education, etc

1.

2. 3. 4. 5.

Concurrent List Social welfare, social services, protection of women, children and young persons Scholarships Town and country planning Drainage and irrigation National Parks, etc.

1.

2. 3. 4.

State List Islamic law and personal and family law of Muslims; Malay customs, offences by Muslims; Syariah Courts. Land Local government State holidays,etc

2) The State Constitutions Each State possesses its own constitution regulating the government of that State. The State Constitution contains provisions which are enumerated in the Eighth Schedule to the Federal Constitution. Some of these provisions include matters concerning the Ruler, the Executive Council, the Legislature, the Legislative Assembly, financial provisions, and amendment of the Constitution.

3) Legislation Legislation refers to law enacted by a body constituted for this purpose. In Malaysia, laws are legislated by Parliament at federal level and by the various State Legislative Assemblies at state level. Laws made by Parliament may extend throughout the country and extra-territorially while laws enacted by a State Assembly can only apply to that State. Laws that are enacted by Parliament after 1946 but before 1957 are called Ordinances, but those made after 1957 are called Acts. Laws made by the SLA are called Enactments except in Sarawak (Ordinance).

Contd
Parliament and the State Legislatures have to enact laws subject to the provisions set out in the Federal and State Constitutions. The subject matter for legislation is divided between the Federal and State Governments as provided by the Ninth Schedule of the FC. Legislature as a source of law has become more important than case law or precedents. It is being increasingly used as a means of repealing, amending, enacting or codifying the law.

4) Subsidiary Legislation
SL is also known as subordinate legislation or delegated legislation. The Interpretation Act 1967, defines subsidiary legislation as any proclamation, rule regulation, order, notification, by-law or other instrument made under any Ordinance, Enactment or other lawful authority and having legislative effect. SL is very important as legislation by Parliament and the State Legislatures is insufficient to provide the laws required to govern everyday matters. SL deals with the details about which legislature has neither the time nor the technical knowledge to enact laws.

Contd
Legislature merely lays down the basic and main laws, leaving the details to persons or bodies to whom they delegate their legislative powers. Such persons or bodies include the Yang diPertuan Agong, Ministers and local authorities, among others. A rule or regulation that is properly enacted is as much a law as the parent statute. SL made in contravention of either a Parent Act or the Constitution is void. An exception to this rule is the proclamation of emergency under Article 150 of the FC.

Unwritten Law
It is that portion of Malaysian law which is not written i.e. law which is not being enacted by Parliament or the State Assemblies and which is not found in the written Federal and State Constitutions. It comprises of the following: 1) Principles of English law. 2) Judicial decisions. 3) Customs.

Unwritten Law
1) English Law

English law forms part of the Malaysian laws. It can be found inter alia in the English common law and rules of equity. However, not all of Englands common law and rules of equity form part of Malaysian law. The application of English law in Malaysia is governed by the Civil Law Act 1956 (Revised 1972).

Contd
Section 3(1) of the Civil Law Act 1956 provides

that, in Peninsular Malaysia, the courts shall apply the common law of England and the rules of equity as administered in England on the 7th day of April, 1956. In Sabah, the courts shall apply the common law and the rules of equity, together with statutes of general application, as administered in England on 1st December 1951 and in Sarawak, 12th December 1949. The dates specified for reception is important because later changes in English law are not automatically received.

Contd
However, the application of English law throughout Malaysia is subject to two limitations; 1. It is applied only in the absence of local statutes on the particular subjects. Local law takes precedence over English law as the latter is only meant to fill in the lacuna in the legal system in Malaysia. 2. Only that part of the English law that is suited to local circumstances will be applied proviso to section 3(1), Civil Law Act.

2) Judicial Decision / Precedent

Malaysian law can also be found in the judicial

decisions of the High Court, Court of Appeal and the Federal Court, and the then Supreme Court, Federal Court and the Judicial Committee of the Privy Council. Decisions of these courts were made, and still are being made, systematically by the use of what is called the doctrine of binding judicial precedent. Precedents are basically decision made by judges previously in similar situations.

Contd
Eg.: If the Supreme Court made a certain

decision in 1987 and assuming the facts and situation before a High Court judge deciding a case in 1990 are similar to the said Supreme Court case, the High Court judge must decide the case before him by applying the principles laid down by the Supreme Court in 1987. In English law, the system of binding judicial precedent is called as stare decisis.

Contd
If a judge applies an existing rule of law

without extending it, his decision may be called a declaratory precedent. If the case before him is without precedent, then the decision made by him may be called an original precedent. In this way, judges are constantly contributing to the growth of unwritten law in this country.

Hierarchy of Precedents
It is based on the hierarchy of courts. General rule: decisions of higher courts

bind lower courts and some courts are bound by their own decisions. To understand this principle, one should first understand the court system in Malaysia.

THE JUDICIAL SYSTEM

Federal Court Court of Appeal High Court (Sabah & Sarawak)

High Court (Malaya)

-- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Native Syariah Court & Court Syariah Court Sessions Court Sessions Court Magistrates Court Penghulus Court # The present Court system Magistrates Court

PREVIOUS JUDICIAL SYSTEM Between the period of 1 January 1987 and 23 June 1994, the Court system was as follows:
Supreme Court

High Court (Malaya)

Syariah Court

High Court (Borneo)

SUPERIOR COURTS SUBORDINATE COURTS

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - -Native Court & Syariah Court

Sessions Court Magistrates Court

Sessions Court Magistrates Court

Penghulus Court

Prior to 1 January 1987, however, the court system was as follows:

PRIVY COUNCIL* (civil cases only)

Federal Court

High Court (Malaya) High Court (Borneo) SUPERIOR COURTS -----------------------------------------------------------Syariah Court Native Court & Syariah Court SUBORDINATE COURTS

Sessions Court

Sessions Court

Magistrates Court Penghulus Court *through the YDPA

Magistrates Court

Distinguishing Precedents

1.

2.

3.

It is not in every case that judges apply earlier precedents. A judge may not wish to apply precedents in the following circumstances: Judges may ignore or overrule a precedent laid down by a lower court, where the case is on appeal. They may refuse to apply the earlier precedent if it is arrived at per incuriam (i.e. made in ignorance of a statute or a binding precedent). They may distinguish the case when they find there are material differences in facts between the case before them and the case laying down the precedent.

Advantages
1. 2. 3.

There are advantages in applying the system of binding judicial precedents: The law evolved is more practical since it evolved through actual experiences. It is more flexible compared to statute law. Case law is richer in legal detail than statute law.

Disadvantages
There are disadvantages in applying the system of binding judicial precedents: 1. As the number of cases decided can only increase, there is a tendency to overlook some authorities inadvertently due to the mass of material to be digested. 2. It is sometimes difficult to distinguish whether a particular statement in a judgment is ratio or dicta. It is the ratio decidendi of a case which makes the decision a precedent for the future. An obiter dictum is not binding as a precedent.

3) Customs
Customs of the local inhabitants in Malaysia are

also a source of law. Generally, customs relating to family law, i.e. marriage, divorce and inheritance, are given legal force by the courts in Malaysia. Adat applies to Malays i.e. adat perpatih and adat temenggung. Prior to the enforcement of the Law Reform (Marriage and Divorce) Act 1976, Hindu and Chinese customary law applied to the Hindus and Chinese respectively. However, after the enforcement of the Act, polygamous marriages were abolished.

Contd
Since then, Chinese and Hindu customs

have become of little or no effect as a source of law in Malaysia. In Sabah and Sarawak, native customary laws apply in land dealings over native customary lands and family matters where natives subject themselves to native customary laws.

Islamic Law
The Federal Constitution provides that

States have the power to administer Muslim Law. The head of the Muslim religion in a State (except for Penang, Malacca, Sabah, Sarawak and the Federal Territories, in which the Yang di-Pertua Negeri is the head ) is the Sultan. Muslim law applies to Muslims only and it is enforced by the Syariah Courts.