TOPIC : MALAYSIAN LEGAL SYSTEM

BUSINESS LAW
LAW 416

PREPARED FOR :
PUAN MARDHIAH HAYATI BINTI ABU BAKAR

PREPARED BY :
AIMI AISYAH BINTI WAHID (2021477238)
AISHAH BINTI AZIZOL RAHMAN (2021626994)
ALIFF AIMAN BIN AHMAD RASHID (2021462228)
LYDIA BINTI ARDIANSA (2021888162)
MUHAMMAD ZACKRYULLAH BIN MUHAMMAD (2021843454)
NUR ALISSA ILLYANA BINTI MUHAMMAD KHAIRUDDIN (2021858738)

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1. Concept of Judicial Precedent

The concept of judicial precedent, which asserts that when considering a new case by a judge
in court, the court must adhere to what has been ruled in a previous case. The general rule
governing the precedent hierarchy is based on the notions that decisions of higher courts bind
lower courts and that certain courts are bound by their own decisions. It is based on stare
decisis or sticking to what has been determined. This means that, based on prior cases in
which the facts of the case are the same, a court will follow the prior judgement of a higher
court as well as its own prior decision of a court at the same level. The doctrine primarily
applicable to decisions issued by Superior Courts, namely the Federal Court, the Court of
Appeal, and the High Court. This doctrine of binding judicial precedent states that judgments
of higher courts must be obeyed by courts below as in court structure's hierarchy.

Thus, to establish the law or legal principle for a later case, the judge needs to first identify
the relevant facts only afterwards extract the ratio decidendi from the prior case decision that
has the same or comparable material facts and implement that as well to the latter case.
Although it is sometimes stated the decisions of higher courts bind lower courts, this is really
the ratio decidendi that binds upcoming courts. The rationale or legal principle upon which
the decision is based is what the ratio decidendi is. The ratio decidendi must be distinguished
from obiter dictum, which alludes to the judge's opinions or any other facts that are not
directly concerned with the former case. It is also essential to understand the court's
hierarchy. The Federal Court is Malaysia's highest court. It is followed by the Court of
Appeal. The High Court sits beneath the Court of Appeal. These three tribunals are known as
the superior courts. The subordinate courts are the Sessions Courts and Magistrate's Courts,
which are located beneath the High Courts.

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 The Malaysian Court System

Superior Courts

1. High Court
 Two Chief Judges: Malaya's Chief Judge and Sabah and Sarawak's Chief Judge.
 Subject matter jurisdiction is unlimited.
 Has jurisdiction for original, appellate, and supervisory proceedings.
 Has overall supervising and revising authority.

2. The Court of Appeal

 Members include the Court of Appeal's President and up to 10 Court of Appeal
judges.
 Hear and rule on civil appeals in cases (above RM 250,000.)
 Hear and decide on any appeal from a High Court judgement on a criminal subject.

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 3. Federal Court
 Members include the Chief Justice, the President of the Court of Appeal, the Chief
Judges of Malaya, Sabah and Sarawak, and six Federal Court judges.
 Malaysia's highest court and the ultimate court of appeal.
 The Court of Appeal hears civil and criminal cases.
 Decisions bind all lower courts.

Subordinate Courts

1. Children's Court
 Hears and decides any accusation brought against a child (under the age of 18).
 Exercises jurisdiction under the Child Act 2001 or any other written legislation. 
 Hears and decides any accusation brought against a child (under the age of 18).

2. Courts of Magistrates

Civil case:

 First Class Magistrates' Court- all actions and suits are heard here (up to RM100,000).
 Second Class Magistrates' Court hears preliminary proceedings or cases (not
exceeding RM10,000)

Criminal case:

 The First Class Magistrates' Court hears offences punishable by imprisonment for no
more than 10 years or by fine only, as well as offences under Penal Code Sections 392
and 457.
 The Second Class Magistrates' Court hears offences punishable by up to a year in jail
or a fine only.

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 3. Session Courts

Civil case:

 Unrestricted authority to try all civil actions involving a motor vehicle accident,
landlord and tenant, and distress.
 Jurisdiction to hear all other civil actions (not exceed RM1,000,000.)

Criminal case:

 Try all offences save those punishable by death in criminal court.

 Execute any sentence other than the death penalty.

Special Court

 Article 182 of the Federal Constitution established it.

 Hears any civil or criminal action brought against the Yang Di-Pertuan Agong or any
of the Malay Rulers.

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2. Types of Precedents

There are two types of precedent : Mandatory precedents and Persuasive precedents.

Mandatory precedent is called a binding precedent in some court systems. Mandatory

is a precedent which must be followed by all lower courts under common law legal system.
The decision of superior court are binding on lower courts or the superior court are bound by
their own decisions previously. The lower court must refer to the mandatory precedents of
superior courts.

Persuasive precedent is a past decision in legal case that does not follow in future
similar cases, but may help the judge to reach a decision. High Court Judges are not bound to
follow the decisions of another High Court Judges but they can certainly influence the
decision of a court. Judges can examine the precedents established in these courts for
guidance and information. They may study the precedent of an inferior court or a court in
another hierarchy or they may develop a new precedent that is informed or shaped by these
persuasive precedents. There may be no scope for a persuasive precedent if there is a binding
precedent that must be applied.

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3. The Process of Doctrine Judicial Precedent In Malaysia
In Malaysia, the Judicial precedent is based on the stare decisis that should uphold
what has been decided. It means that if the material facts are equally alike, the court must
follow the previous decision of the High Court and its own decision at the same level and the
previous decision of the court1. The Higher Court may overturn its inferior court's decision,
after which the Higher Court's decision takes over the previous binding decision. Once a
precedent is built, it remains binding until it is overturned by the High Court in a later case.
Indicates that cases of the same material situation will be bound are subject to the prior
decision of the High Court. As in the Malaysia context, the supreme court is the Federal
Court of Malaysia. Therefore, court decisions require all courts to comply with them. The
Court of Appeals must bind the decisions of the Federal Court, but the decisions of the Court
of Appeals bind all the High Courts of Malaysia, as well as Sabah and Sarawak.
The approach was about the question of whether the court would bind itself or vice
versa. Federal courts are not bound by their own previous decisions. It was born out of a
treaty in Federal Court convention, where it treats its own previous decisions as binding in
principle. However, it is their right to contradict from the decisions they have made so far.
There a few judges did not apply the earlier precedents 2. Judges may not want to use
precedent when a case is being appealed even if the material difference between the previous
cases. As for the Court of Appeals, it is imperative that they follow their own previous
decisions. However, the practice of judges in Malaysia's High Court assumes that judges in
the High Court are not bound by the decisions of other High Courts. Nevertheless, another
High Court ruling may set a compelling case and be non-binding.
In general, Article 121-131 of the Federal Constitution authorised civil courts to
supervise Malaysian civil law3. According to the Federal Constitution by the ninth schedule,
the list of states (Item 1) and the Items on the Federal List (6)(e), Syariah State Courts and
Federal Territories aims to regulate matters related to Islamic law. If the lower court had not
adhered to this binding precedent doctrine, the judge would have neglected his duties in this
case. At the same time, the court must comply with appropriate procedures and laws when
making a decision4.

1
Irini Ibrahim et al., Introduction to Business Law in Malaysia (For Non-Law Students) (Hulu Langat, Selangor:
Percetakan Malaha, 2020).
2
Shad Saleem Faruqi, “Malaysian Legal System - an Introduction,” UMLR | University of Malaya Law Review,
November 27, 2017, https://www.umlawreview.com/lex-in-breve/malaysian-legal-system-an-introduction.
3
Nor Muhamad et al., “Application of the Doctrine of Binding Precedent in Malaysia: A Re-Evaluation.” J. Pol.
& L. 13 (2020): 263.
4
Mohamed, Ashgar Ali Ali, ed. Malaysian legal system. Malaysian Current Law Journal Sdn Bhd, 2014.

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 The practice of judicial binding case law in Malaysia presented in the case of PPV V.
DATUK TAN CHENG SWEE & ANOR (1980) 5. Datuk Tan Cheng Swee, who was to
become the commissioner of the city of Malacca. He was the chairman member and the
second respondent member. The Committee was an advisory body, and when it accepted the
recommendation, it acted by its own authority as the sole commissioner and not by a majority
vote. Responsibility has always been borne by the chairman and shareholders who owned
20% interest with his family members for the stake in a housing development called Almac.
The second defendant was also a shareholder, but not a director. In particular, Almac
submitted a site plan and two construction plans for approval by the local council, Datuk Tan
himself. After hearing the advice and recommendations of council experts concerned that the
plan complies with or is legislated with the permitted exceptions of such legislation so it was
recommended to pass through. Datuk Tan did not present at the committee meeting but
proceeded the plan. Therefore, the accusations against them were to approve these plans. He
employed his public office for his financial gain, thereby violating Section 2 (1) Emergency
Ordinance No. 22 of the 1970, which the second defendant had abetted twice in the
committee.
The learned High Court judges did not implement the principle of stare decisis which
required him to refer to the judgement from the Higher Court (Federal Court) to ensure the
consistency of future decisions in Malaysia's judicial system.
This case is one of the referred cases in pursuing justice which is that Datuk
Hishamudin, one of the cases mentioned in the pursuit of justice, occasionally broke the
doctrine binding of judicial precedents. In his opposition to the Ishak Hj Shaari v PP (2011),
he judged that the Court of Appeals had the authority to consider his previous decisions to
prevent injustice6.
In the proceedings of Dato` V. Kanagalingam v. David Samuels (2006), an author's
article in a commercial magazine was alleged by a prominent lawyer for the defamation libel
100 million Ringgit. Judge Hishamudin mentioned lawyer misconduct in the Ayer Molek
case pointed out by the Court of Appeals in dismissing the proceedings. He believed that no
one could bring an action based on his or her own mistakes.

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Doctrine of stare decisis: Dato' Tan Heng Chew v Tan Kim Hor & Anor 2006 [FC] - the malaysian bar, March
4, 2006, https://www.malaysianbar.org.my/article/news/court-judgments/judgments/doctrine-of-stare-decisis-
dato-tan-heng-chew-v-tan-kim-hor-anor-2006-fc.
6
Shad Saleem Faruqi, “Judge with Many Landmark Decisions,” Judge with many landmark decisions - the
Malaysian Bar, September 17, 2015, https://www.malaysianbar.org.my/article/news/legal-and-general-news/
legal-news/judge-with-many-landmark-decisions.

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4. The Advantages of Judicial Precedent

Legal certainty

In law, one of the advantages of judicial precedent is certainty. As most of the cases in
present day comprises the same elements with the past cases, it helps the court to decide the
case outcomes based on the previous cases judged by the other judges. The existence of
judicial precedent in legal system also allows the lawyers to advise their clients on allegations
of certain legal action and the best approach to such cases, whether it is beneficial to take
such a problem to the court system or not. This is because, the lawyer might already could
predict the outcome of certain action of the cases handled. Moreover, an individual may also
know to manage their issues according to the Legal principles without bringing it to the court
because they acknowledge that the judicial precedent is certain. To conclude, judicial
precedent is important to ensure certainty in legal system.

Flexibility

The doctrine of precedent also allows for the event of improving new principles by extension
or analogy to satisfy new circumstances. Judges in the higher courts are able to develop and
update the law to take account of changing social conditions. Their opinions may impact
Parliament to introduce or modernize new statutory rules. Judicial precedent may produce a
standard that applies to analogous cases and situations, but it is not a mandatory result.
Higher courts do dictate that lower ones follow rules to the letter, but also, they reserve the
right to change their mind when an appeal occurs or issues in society change. Judges may not
write the laws, but it's their job to interpret them as directly as possible in every situation.
This system creates a series of checks and balances which influences other situations of
government to serve and cover the population in the stylish possible manner every time

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Fair judgements

Judicial precedent is to certify that the law is fair to everyone without any biased moves. This
is because the judges make fair judgement which the rulings are according to the similar
court case of the past judgements by other judges. The binding precedent provides guaranteed
of a system where everyone with a similar case will be treated in a similar approach as it
leads to fairness of justice. The law has to be fair because it would not only give a
commensurable punishment to the offender, but it is also to give a protection to the victims.
Therefore, the existence of judicial precedents allows the court to provide a fairness
judgement between the offender and the victim. There is one case in United States occurred
recently which could be an example of unfairness ruling. In 2018, a 79-year-old, wealthy
businessman in California was sentenced 90 days house arrest after he claims that he is no
contest to the rape of a five-year-old child. He will also not register as a sex offender.
Usually, this kind of case would require a state prison and after released, the wrongdoer
would be registered as sex offender. However, it does not apply to this businessman as it is
not following the Legal action. This can be concluded that judicial precedent is important in
order to prevent this kind of cases to occur again in future.

New precedents

A new precedent will be created if a case is occurred for the first time in order to get prepared
for the upcoming issues that have the same elements with the case. This is because to keep its
certainty when the future judgement happens to face the same issue as this case. New
situations arise all of the time in society, and they are not always covered by statutory rules or
former judgements. These systems gave an opportunity for a judge to consider that the past
related legal cases are not exactly accurate or even take issues from other countries to make a
judgement according to the available information.

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5. The Disadvantages of Judicial Precedent

RIGID
As a result of the establishment of the hierarchy in judicial precedent, the law becomes rigid.
It does not allow for many changes and development in the law. This is due to the fact the
judicial precedents are obligated to follow the hierarchy of binding precedent even if the law
decision seem to be regarded as unjust and unreasonable. Furthermore, since there are
rigidities in constitutions in which the law has to get approval from the superior courts, the
law has to take a long time to adapt on political, social issues and economic issues, making it
unsystematic. This indicates that judicial precedent is outdated since it has a very little room
for flexibility.
Therefore, the lower court judge is anticipated to follow the pattern of recent superior court
judgments, regardless of the situations.

Complexity And Volume

A massive amount of law cases reported on one estimate makes it difficult for the barristers
to interprete the case. As a result, barristers will have a difficult time choosing the correct
cases since there are thousands of subtle distinctions in each cases. Therefore, determining
the right precedent for the matter at hand is extremely difficult. Even an experienced barrister
can overlook an essential rule to be applied on cases. 

Injustice in Overruling
An overruling occurred when a court was requested to reconsider whether a precedent
established by a lower court case from an earlier case was a valid law. For example, a lower
court’s decisions may be overruled by a higher court, which would seem unfair and
unreasonable. This can result in one case to be injustice in all of the subsequent cases.

This effect can be described by referring to the case of “R v R [1991] 3 WLR 767 House of
Lords.” The choice in R v R (1991) to perceive the chance of assault inside marriage might
be viewed to act as an illustration of this, although, the House of Lords felt compelled to
express that they were not really adjusting the law. However, this would cause a
misinterpretation concerning that it would affect the true meaning of the original cases.

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Illogical Distinction
The fact that binding precedents must be followed even if there are a significantly distinctions
to the previous case and the case before them will make the judges find it difficult to
distinguish on finding the right cases for the law. As a result, all judicial prescedents face
complications in law.

Retrospective Effect
The retrospective effect is a law that retroactively makes criminal an act that was not criminal
at the time it was done. It entails the application of events that occurred before to the current
case. Therefore, this may be considered as unfairness, since if a case changes the law, the
people that were involved in that case would not have known what the law before acting.
This effect is best described by referring to the case of “Madhavrao Balwant Patil v. State of
Maharashtra and Ors, 2019” The problem in this case was the applicability of the fourth
clause to Section 88(1) of the Maharashtra Cooperative Societies Act, which was added by an
amendment. The court concluded that the fourth stipulation is review in activity, and the
public authority is enabled to expand the time of request procedures that stayed inadequate
because of deficiency of time, by virtue of expiry of 2 years (Period specified for request
procedures), as on date of initiation of the change act in 2017.

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6. The Conclusion

The doctrine of binding precedent's ability to adapt to new trends and deliver justice is critical
to its continuous use. There are several considerations that imply that the doctrine will
continue to play the most important role in English law for some time to come.

The doctrine thrives in the lack of a comprehensive code. However, even if English law
adopts a code, there is no reason to suppose that the two will be incompatible. The common
lawyer's way of thinking will not be changed. It would be caselaw. In order to read the code,
we must rely on caselaw created by judges. The continuous emphasis on caselaw goes hand
in hand with the emphasis on caselaw. operation of a fairly effective legal reporting system
difficulties abound in the existing system at the moment, but on the general, the use of the
lawyer's search is greatly aided by indexes and digests for authorities.

If the English judicial hierarchy survives, the doctrine of binding precedent must also survive;
the two are inextricably linked. "When a single decision can establish the law on a particular
topic, the highest tier court must have the final say, and that last word must be obeyed by all
lower tier courts, no matter how much they believe it is wrong." (138) At any given time,
there should, in theory, be a sufficiently definitive manner of resolving differing legal
opinions among different tiers of courts. It would certainly be strange if a judge whose
position had been rejected by a... higher tribunal could nonetheless hold to it in his
subsequent judgements." (139) In most circumstances, the availability of appeal eliminates
the need for excessive judicial individualism, which just adds to the cost of litigation.

For English attorneys, binding precedents are the traditional source of law. "English lawyers'
training is primarily a training in caution and conservatism." Their education lays "much
more emphasis on the development of what might be called a legal attitude to the cases than
is true in a Continental law school," according to 140. (141) The goal is to use previous
judicial experience to current judicial issues, as well as to maintain the powerful restraints of
"continuity in conventional modes of professional thought and in traditional regulations."
(142) A lawyer who has spent years cultivating this trait will find it difficult, if not
impossible, to think otherwise.

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Finally, the notion of binding precedent must be maintained to ensure that justice is served. It
will be treading dangerous ground if, in its good intentions to bring certainty, it instead
provides certainty of injustice, because injustice or inconvenience will finally kill the
ideology. However, as complete certainty and predictability are impossible to achieve, some
uncertainty must be accepted as part of the price, lest the system be destroyed by its own
actions. Justice will be served by ensuring that decisions are consistent, that litigants are
treated equally, and that judges are impartial. The theory of binding precedent has made the
common law "one of the two great systems of jurisprudence existent today in the Western
world," rather than being overly strict. It has offered "a remarkable capacity for adapting to
changing social conditions," as well as "a consistency of legal thought and conduct." (144)

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