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BUSINESS LAW
(LAW101)
Revision 1 – Malaysian Legal System 1
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Introduction
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Introduction

LAW

Superior Being Inferior Being Sanctions

The State The individual

Imprisonment Fines Damages Injunction Specific

performance
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Federation

LAW IN MALAYSIA
 Malaysia is a federation
 Each state in Malaysia has a
government and its own law making
body
 The law making body at the State level
is called the State Legislative Assembly
 At the state level, the state is run by the
Chief Minister / Menteri Besar and his
Exco members
 Malaysia, as a whole, has a government
and its own law making body
 The law making body at the Federal
level is called Parliament
 At the federal level, the country is run by
the Prime Minister and his Cabinet
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Federation
• Law made by Parliament is applicable to everyone is
Malaysia
• Laws made by the respective State Legislative Assembly
is only applicable in the state where the law is made
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Malaysia

Federal Level State Level

Parliament State Legislative

Assembly

Laws are applicable Laws are only

to everyone in applicable in the
Malaysia state where the law
was made
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Sources of Law

Written law Unwritten law

Sources that fall Sources that fall within

within this category this category are not
(danh mục) are formally and officially
formally and made
officially made by
some law making
body or by someone
to whom the law
making body has
given power to make
laws
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Sources of Law
• Refers to where law can be found in Malaysia
• Laws in Malaysia can be found in 7 sources, namely: -
◦ Constitution
◦ Legislation / Statute
◦ Subsidiary legislation / delegated legislation
◦ Case law / Common law / Judicial precedent
◦ English common law
◦ Custom
◦ Islamic / Muslim law
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Sources of Law

Constitution Subsidiary Custom

legislation
Muslim law
Case law /
Legislation common law /
judicial precedent

English common
law
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Sources of Law
Muslim law

Written Law Unwritten Law

Constitution Subsidiary Custom

legislation
Case law /
Legislation common law /
judicial precedent

English common
law
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Written Law
• Refers to the law that is contained in a formal document
and which has been passed by a person or body that is
authorised to do so.
• Written law is the most important source of law
• These are the sources of law which have been codified
and consolidated
• They are organised and arranged properly
• In Malaysia, written law consists of:
• The Federal and State Constitutions,
• The legislation passed by Parliament and State Legislative
Assemblies
• Subsidiary legislation.
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Sources of Law
• Unwritten law is the portion of Malaysian law which is
not written e.g. which is not enacted by Parliament or
the State Assemblies and which is not found in the
written Federal and State Constitutions
• These are the sources of law which have not been
codified and consolidated
• Refers to the law that has not been formally enacted.
• The unwritten law consists of: -
• Case law (i.e. decisions of the superior courts which are binding
on the lower courts),
• customary law (i.e. local customs which have been accepted as
law by the courts) and
• Applicable principles of English common law and equity.
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Sources of Law
• One other important source of Malaysian law is Muslim
law
• Muslim or Islamic law is increasing being applied in our
local laws e.g. incorporation of some Islamic principles
into banking laws
• Muslim law applies to all persons who are Muslims e.g.
laws relating to family matters (e.g. marriage and divorce)
and estate matters relating to the division of property and
assets when a person dies
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The Federal Constitution

• Malaysia is a Federation of 13 States with a
written constitution
• The Federal Constitution is the supreme law of
the country
• It lays down the powers of the Federal and State
Governments and the basic or fundamental rights
of the individual
• It can only be changed by a two-thirds majority of
the total number of members of the legislature
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The Federal Constitution

 The Federal Constitution declares itself as the supreme
law of the Federation (Article 4(1) Federal Constitution)
 Thus, even laws enacted by Parliament which are
inconsistent with the Federal Constitution may be
declared void by the Courts
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The Federal Constitution

 Article 73 of the Federal Constitution confers
legislative power to the Federal Parliament and
the State Legislatures
 Thus, Parliament may make laws for the whole
of Malaysia
 Article 74 of the Federal Constitution provides
that Parliament may make laws with respect to
any of the matters enumerated in the Federal
List (List I) or the Concurrent List (List III) of the
Ninth Schedule
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The Federal Constitution

 The Federal List (List I) may be summarised as
follows:
 External affairs
 National defence
 Internal security
 Civil and criminal law and procedure and the administration of justice
 Federal citizenship and naturalisation; aliens
 The machinery of government
 Finance
 Trade, commerce and industry
 Shipping, navigation and fisheries
 Communications and transport
 Federal works and power
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The Federal Constitution

 The Federal List (List I) may be summarised as follows:
 Surveys, inquiries and research
 Education
 Medicine and health
 Labour and social security
 Welfare of the aborigines
 Professional occupations
 Holidays; standard of time
 Unincorporated societies
 Control of agricultural pests; protection against such pests;
prevention of plant diseases
 Newspaper; publications; publishers; printing and printing presses
 censorship
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The Federal Constitution

 The Federal List (List I) may be summarised
as follows:
 Theatres; cinemas; public amusements
 Federal housing and improvement trusts
 Co-operatives societies
 Prevention and extinguishment of fire, including fire services
and fire brigades
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The Federal Constitution

 The Concurrent List (List III) is summarised as follows:
 Social welfare, social services, protection of women, children and young
persons
 Scholarships
 Protection of wild animals and wild birds; National Parks
 Animal husbandry
 Town and country planning
 Vagrancy and itinerant hawkers
 Public health, sanitation and prevention of diseases
 Drainage and irrigation
 Rehabilitation of mining land and land which has suffered soil erosion
 Fire safety measures and fire precautions in the construction and
maintenance of buildings
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Federal Constitution
 The State List (List II) covers matters such as the
following: -
 Islamic law and personal and family law of Muslims; Malay customs;
offences by Muslims; Syariah Courts
 Land
 Agriculture and forestry
 Local government
 Local services
 State works and water
 Machinery of the State Government
 State holidays
 Offences against State Law
 Inquiries for State purposes
 Indemnity
 Turtles and riverine fishing
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Legislation
• Refers to law enacted by a body constituted for
this purpose
• Laws are legislated by: -
• Parliament at federal level
• Various State Legislative Assemblies at state
level
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Legislation
Date Enacted by Called
After 1946 but Parliament Ordinance
before 1957
After 1957 Parliament Act
State Legislative Enactment
Assemblies
(except
Sarawak)
Sarawak Ordinance
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Legislative Process
• In each Dewan, the Bill goes through four stages
• First Reading
• Second Reading
• Committee Stage
• Third Reading
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Subsidiary Legislation
• Subsidiary / delegated legislations are laws which are
made by someone / somebody whom Parliament at
the Federal level or the State Legislative Assembly at
the State Level has given power to this body to make
such laws
• Parliament / State Legislative Assembly gives power to
somebody to make laws for them
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DELEGATED LEGISLATION
PARLIAMENT

AUTHORITY
DELEGATES
SUBORDINATE BODY

LOCAL COUNCIL

MINISTERS
PROFESSIONAL BODIES
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Example
Legislation
 The Companies Act 2016
Subsidiary legislation
 The Companies Regulations 2017
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Subsidiary Legislation
• It is important because: -
• Delegated legislation can be passed very quickly and is more
flexible. This is because it does not have to undergo the various
stages of procedure which has to be followed in Parliament or the
State Legislative Assemblies. Similarly, if the need arises,
subsidiary legislation can be just as speedily amended or even
rescinded to meet the changing needs of society.
• Delegated legislation deals with the detailed rules necessary to
implement the law. As Parliament does not have sufficient time to
deal with such minute details, delegated legislation is the more
efficient way to fulfil this need.
• Some matters require the special skill and knowledge of experts
in that area. Parliament itself may not have sufficient experts for
this purpose. Thus, delegated legislation fulfils this need as well.
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The Common Law

• Also known as case law and judicial precedent
• These are laws which are made by judges
• When a judge makes a decision, his decision may end up
becoming a law
• When a judge makes a decision in a case he is deciding,
this decision must be followed by all judges of lower
courts provided the facts of the case is similar
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The Common Law

• If a judge applies an existing rule of law without extending
it, his decision may be called declaratory precedent
• If the case before him is without precedent, then the
decision made by him may be called an original
precedent
• Judges are constantly contributing to the growth of
unwritten law in this country
• The system of binding judicial precedent is called stare
decisis
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The Common Law

 The principle of law to be followed must form part of the
ratio decidendi of the case
 The ratio decidendi is the 'reason for the decision' and is
the principle of law as applied to the facts of the case; it
is a matter of interpretation for the later judge to
determining the similar dispute
 Obiter dicta (general judicial observation) is made by a
judge in the course of his judgement. It is not strictly
relevant to the decision. It is treated as persuasive
precedent i.e. for later judges to pay attention. These are
not binding but if stated by an important court in the
structure
RATIO DECIDENDI & OBITER DICTA
OBITER DICTA
RATIO DECIDENDI:
The main reason/s for
deciding a case in a
MAY BE particular way
BINDING

Other reasons given in passing

NOT BINDING BUT MAY BE OF

PERSUASIVE AUTHORITY (THẨM
QUYỀN CÁ NHÂN)
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The Common Law

• 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
higher 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

• Các thẩm phán có thể bỏ qua hoặc bỏ qua một tiền lệ do tòa án
cấp trên đặt ra, nơi vụ án đang được kháng nghị
• Họ có thể từ chối áp dụng tiền lệ trước đó nếu nó đến vào mỗi
 Advantages of Judicial Precedent
Flexible
It is more flexible
Legal Details
Case law is richer
when compared to in legal detail than
statute law statute law
enacted (ban
Actual Facts hành) by Certainty
Since the law is a Parliament
It provides greater
result of an actual certainty in the
dispute rather than law
a hypothetical
situation, it is
more practical
since it evolved ADVANTAGES
through actual
experiences and
not a result of
abstract theory
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The Common Law

 Disadvantages: -
 As the number of cases decided can only increase, judges
and lawyers are compelled to engage in greater research
and reading. Due to the mass of material to be digested,
there is a tendency to overlook some authorities (Do khối
lượng lớn vật chất cần tiêu hóa nên một số cơ quan chức
năng có xu hướng xem nhẹ)
 It is sometimes difficult to tell whether a particular statement
in a judgment is ratio or dicta. (Đôi khi rất khó để phân biệt
một tuyên bố cụ thể trong một phán đoán ratio or dicta)
Judges seldom indicate the ratio decidendi or obiter dicta
 Judges are not elected by the people unlike members of
Parliament who are representative of the people. Therefore,
judges may not know the needs of the general public when
making these case laws
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English Law
• Forms part of the laws of Malaysia
• Can be found in the English common law and rules of
equity
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English Law
• The application of the law of England throughout Malaysia
is subject to 2 limitations: -
• It is applied only in the absence of local statutes on particular
matters i.e. there is lacuna in Malaysian law
• Only part of the English law that is suited to local circumstances
will be applied (proviso to s3(1) Civil Law Act)

• Việc áp dụng luật của Anh trên toàn lãnh thổ Malaysia có 2 giới
hạn:
• -Nó chỉ được áp dụng trong trường hợp không có luật địa phương
về các vấn đề cụ thể, tức là có quy định của pháp luật Malaysia
• -Chỉ một phần của luật tiếng Anh phù hợp với hoàn cảnh địa
phương sẽ được áp dụng (điều khoản s3 (1) Đạo luật dân sự)
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Islamic Law
• Applicable only to Muslims
• Administered by Syariah Courts
• Except for the federal territories of Kuala Lumpur and
Labuan, the power to administer Islamic law is primarily
that of the States
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Custom
• Customs of the local inhabitants in Malaysia are also a
source of law
• Customs relating to family law (marriage, divorce and
inheritance) are given legal force by the courts in Malaysia
• In Sabah and Sarawak, native custom-matters apply in
land dealings over native customary lands and family
matters
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QUESTIONS