business law_malaysian legal system

BUSINESS LAWBUSINESS LAW(LAW 416)(LAW 416)

MALAYSIAN LEGAL MALAYSIAN LEGAL SYSTEMSYSTEM

ObjectiveObjective

To enable students to understand the To enable students to understand the sources of law, the Courtsources of law, the Court’’s system and the s system and the administration of justice in Malaysia.administration of justice in Malaysia.

SOURCES OF MALAYSIAN LAWSOURCES OF MALAYSIAN LAW

Meaning of SourcesMeaning of Sources-- legal sources i.e the legal rules that make legal sources i.e the legal rules that make

up the law in Malaysia.up the law in Malaysia.-- Malaysian law can be classified into: Malaysian law can be classified into:

written law, unwritten law and Muslim law. written law, unwritten law and Muslim law.

Written Law

Malaysian Law

Unwritten Law Islamic Law

Federal Constitution

State Constitution

English Law

Judicial Precedent

Custom

Legislation

Subsidiary Legislation

Common Law

Equity

Written LawWritten Law•• It is the most important source of law. It is the most important source of law. •• It refers to that portion of Malaysian It refers to that portion of Malaysian

law which includes the following:law which includes the following:1)1) The Federal Constitution.The Federal Constitution.2)2) The State Constitutions.The State Constitutions.3)3) Legislation.Legislation.4)4) Subsidiary legislation.Subsidiary legislation.

Written LawWritten Law1)1) The Federal ConstitutionThe Federal Constitution

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

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

State ListState List1.1. Islamic law and Islamic law and

personal and personal and family law of family law of Muslims; Malay Muslims; Malay customs, customs, offences by offences by Muslims; Muslims; SyariahSyariah Courts.Courts.

2.2. LandLand3.3. Local Local

governmentgovernment4.4. State State

holidays,etcholidays,etc

Concurrent ListConcurrent List1.1. Social welfare, Social welfare,

social services, social services, protection of protection of women, children women, children and young and young personspersons

2.2. Scholarships Scholarships 3.3. Town and country Town and country

planningplanning4.4. Drainage and Drainage and

irrigationirrigation5.5. National Parks, National Parks,

etc.etc.

Federal ListFederal List1.1. External External

affairsaffairs2.2. National National

defencedefence3.3. Internal Internal

securitysecurity4.4. Civil and Civil and

criminal lawcriminal law5.5. FinanceFinance6.6. Trade, Trade,

commerce, commerce, industryindustry

7.7. Education, Education, etcetc

2) The State Constitutions2) The State Constitutions

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

3) Legislation3) LegislationLegislation refers to law enacted by a body Legislation refers to law enacted by a body constituted for this purpose. constituted for this purpose. In Malaysia, laws are legislated by Parliament In Malaysia, laws are legislated by Parliament at federal level and by the various State at federal level and by the various State Legislative Assemblies at state level.Legislative Assemblies at state level.Laws made by Parliament may extend Laws made by Parliament may extend throughout the country and extrathroughout the country and extra--territorially territorially while laws enacted by a State Assembly can while laws enacted by a State Assembly can only apply to that State.only apply to that State.Laws that are enacted by Parliament after Laws that are enacted by Parliament after 1946 but before 1957 are called 1946 but before 1957 are called OrdinancesOrdinances, , but those made after 1957 are called but those made after 1957 are called ActsActs. . Laws made by the SLA are called Laws made by the SLA are called EnactmentsEnactments except in Sarawak (Ordinance).except in Sarawak (Ordinance).

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

4) Subsidiary Legislation4) Subsidiary Legislation

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

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

Unwritten LawUnwritten Law•• It is that portion of Malaysian law which is It is that portion of Malaysian law which is

not written i.e. law which is not being not written i.e. law which is not being enacted by Parliament or the State enacted by Parliament or the State Assemblies and which is not found in the Assemblies and which is not found in the written Federal and State Constitutions. written Federal and State Constitutions.

•• It comprises of the following:It comprises of the following:1)1) Principles of English law.Principles of English law.2)2) Judicial decisions.Judicial decisions.3)3) Customs.Customs.

Unwritten LawUnwritten Law1)1) English LawEnglish Law•• English law forms part of the Malaysian English law forms part of the Malaysian

laws. It can be found laws. It can be found inter inter aliaalia in the English in the English common law and rules of equity.common law and rules of equity.

•• However, not all of EnglandHowever, not all of England’’s common law s common law and rules of equity form part of Malaysian and rules of equity form part of Malaysian law. law.

•• The application of English law in Malaysia is The application of English law in Malaysia is governed by the Civil Law Act 1956 governed by the Civil Law Act 1956 (Revised 1972).(Revised 1972).

ContCont’’dd•• Section 3(1) of the Civil Law Act 1956 provides Section 3(1) of the Civil Law Act 1956 provides

that, in that, in Peninsular MalaysiaPeninsular Malaysia, the courts shall , the courts shall apply the common law of England and the rules apply the common law of England and the rules of equity as administered in England on the of equity as administered in England on the 77thth

day of April, 1956.day of April, 1956.•• In In SabahSabah, the courts shall apply the common law , the courts shall apply the common law

and the rules of equity, together with statutes of and the rules of equity, together with statutes of general application, as administered in England general application, as administered in England on on 11stst December 1951December 1951 and in and in SarawakSarawak, , 1212thth

December 1949.December 1949.•• The dates specified for reception is important The dates specified for reception is important

because later changes in English law are not because later changes in English law are not automatically received.automatically received.

ContCont’’dd•• However, the application of English law However, the application of English law

throughout Malaysia is subject to two throughout Malaysia is subject to two limitations;limitations;

1.1. It is applied only in the absence of local It is applied only in the absence of local statutes on the particular subjects. Local law statutes on the particular subjects. Local law takes precedence over English law as the takes precedence over English law as the latter is only meant to fill in the lacuna in the latter is only meant to fill in the lacuna in the legal system in Malaysia.legal system in Malaysia.

2.2. Only that part of the English law that is suited Only that part of the English law that is suited to local circumstances will be applied to local circumstances will be applied –– proviso proviso to section 3(1), Civil Law Act.to section 3(1), Civil Law Act.

2)2) Judicial Decision / PrecedentJudicial Decision / Precedent

•• Malaysian law can also be found in the judicial Malaysian law can also be found in the judicial decisions of the High Court, Court of Appeal and decisions of the High Court, Court of Appeal and the Federal Court, and the then Supreme Court, the Federal Court, and the then Supreme Court, Federal Court and the Judicial Committee of the Federal Court and the Judicial Committee of the Privy Council.Privy Council.

•• Decisions of these courts were made, and still Decisions of these courts were made, and still are being made, systematically by the use of are being made, systematically by the use of what is called the what is called the ‘‘doctrine of binding judicial doctrine of binding judicial precedentprecedent’’..

•• Precedents are basically decision made by Precedents are basically decision made by judges previously in similar situations.judges previously in similar situations.

ContCont’’dd•• EgEg.: If the Supreme Court made a certain .: If the Supreme Court made a certain

decision in 1987 and assuming the facts decision in 1987 and assuming the facts and situation before a High Court judge and situation before a High Court judge deciding a case in 1990 are similar to the deciding a case in 1990 are similar to the said Supreme Court case, the High Court said Supreme Court case, the High Court judge must decide the case before him by judge must decide the case before him by applying the principles laid down by the applying the principles laid down by the Supreme Court in 1987.Supreme Court in 1987.

•• In English law, the system of binding In English law, the system of binding judicial precedent is called as judicial precedent is called as stare stare decisisdecisis..

ContCont’’dd•• If a judge applies an existing rule of law If a judge applies an existing rule of law

without extending it, his decision may be without extending it, his decision may be called a called a declaratory precedentdeclaratory precedent..

•• If the case before him is without If the case before him is without precedent, then the decision made by him precedent, then the decision made by him may be called an may be called an original precedentoriginal precedent..

•• In this way, judges are constantly In this way, judges are constantly contributing to the growth of unwritten law contributing to the growth of unwritten law in this country.in this country.

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

bind lower courts and some courts are bind lower courts and some courts are bound by their own decisions.bound by their own decisions.

•• To understand this principle, one should To understand this principle, one should first understand the court system in first understand the court system in Malaysia.Malaysia.

THE JUDICIAL SYSTEMTHE JUDICIAL SYSTEMFederal Court

Court of Appeal

High Court (Malaya) High Court (Sabah & Sarawak)

Sessions Court Sessions Court

Magistrates’ Court Magistrates’ Court

Penghulu’s Court

# The present Court system

SyariahCourt

NativeCourt &SyariahCourt

-- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

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

Supreme Court

High Court (Malaya) High Court (Borneo)

Sessions Court Sessions Court

Magistrates’ Court Magistrates’ Court

Penghulu’s Court

SyariahCourt Native

Court & SyariahCourt

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - --

SUPERIOR COURTS

SUBORDINATE COURTS

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

Federal Court

High Court (Malaya) High Court (Borneo)

Sessions Court Sessions Court

Magistrates’ Court Magistrates’ Court

Penghulu’s Court

PRIVY COUNCIL* (civil cases only)

*through the YDPA

SyariahCourt

Native Court & SyariahCourt

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -SUPERIOR COURTS

SUBORDINATE COURTS

Distinguishing PrecedentsDistinguishing Precedents•• It is not in every case that judges apply earlier It is not in every case that judges apply earlier

precedents. A judge may not wish to apply precedents. A judge may not wish to apply precedents in the following circumstances:precedents in the following circumstances:

1.1. Judges may ignore or overrule a precedent Judges may ignore or overrule a precedent laid down by a lower court, where the case is laid down by a lower court, where the case is on appeal.on appeal.

2.2. They may refuse to apply the earlier precedent They may refuse to apply the earlier precedent if it is arrived at if it is arrived at per incuriamper incuriam (i.e. made in (i.e. made in ignorance of a statute or a binding precedent).ignorance of a statute or a binding precedent).

3.3. They may distinguish the case when they find They may distinguish the case when they find there are material differences in facts between there are material differences in facts between the case before them and the case laying the case before them and the case laying down the precedent.down the precedent.

AdvantagesAdvantages

•• There are advantages in applying the There are advantages in applying the system of binding judicial precedents:system of binding judicial precedents:

1.1. The law evolved is more practical since it The law evolved is more practical since it evolved through actual experiences.evolved through actual experiences.

2.2. It is more flexible compared to statute It is more flexible compared to statute law.law.

3.3. Case law is richer in legal detail than Case law is richer in legal detail than statute law.statute law.

DisadvantagesDisadvantages•• There are disadvantages in applying the There are disadvantages in applying the

system of binding judicial precedents:system of binding judicial precedents:1.1. As the number of cases decided can only As the number of cases decided can only

increase, there is a tendency to overlook some increase, there is a tendency to overlook some authorities inadvertently due to the mass of authorities inadvertently due to the mass of material to be digested.material to be digested.

2.2. It is sometimes difficult to distinguish whether a It is sometimes difficult to distinguish whether a particular statement in a judgment is particular statement in a judgment is ratioratio or or dicta. It is the dicta. It is the ratio decidendiratio decidendi of a case which of a case which makes the decision a precedent for the future. makes the decision a precedent for the future. An An obiter dictumobiter dictum is not binding as a precedent.is not binding as a precedent.

3) Customs3) Customs

•• Customs of the local inhabitants in Malaysia are Customs of the local inhabitants in Malaysia are also a source of law.also a source of law.

•• Generally, customs relating to family law, i.e. Generally, customs relating to family law, i.e. marriage, divorce and inheritance, are given marriage, divorce and inheritance, are given legal force by the courts in Malaysia.legal force by the courts in Malaysia.

•• ‘‘AdatAdat’’ applies to Malays i.e. applies to Malays i.e. adatadat perpatihperpatih and and adatadat temenggungtemenggung..

•• Prior to the enforcement of the Law Reform Prior to the enforcement of the Law Reform (Marriage and Divorce) Act 1976, Hindu and (Marriage and Divorce) Act 1976, Hindu and Chinese customary law applied to the Hindus Chinese customary law applied to the Hindus and Chinese respectively.and Chinese respectively.

•• However, after the enforcement of the Act, However, after the enforcement of the Act, polygamous marriages were abolished.polygamous marriages were abolished.

ContCont’’dd•• Since then, Chinese and Hindu customs Since then, Chinese and Hindu customs

have become of little or no effect as a have become of little or no effect as a source of law in Malaysia.source of law in Malaysia.

•• In In SabahSabah and Sarawak, native customary and Sarawak, native customary laws apply in land dealings over native laws apply in land dealings over native customary lands and family matters where customary lands and family matters where natives subject themselves to native natives subject themselves to native customary laws.customary laws.

Islamic LawIslamic Law•• The Federal Constitution provides that The Federal Constitution provides that

States have the power to administer States have the power to administer Muslim Law. Muslim Law.

•• The head of the Muslim religion in a State The head of the Muslim religion in a State (except for (except for PenangPenang, Malacca, , Malacca, SabahSabah, , Sarawak and the Federal Territories, in Sarawak and the Federal Territories, in which the Yang which the Yang didi--PertuaPertua NegeriNegeri is the is the head ) is the Sultan.head ) is the Sultan.

•• Muslim law applies to Muslims only and it Muslim law applies to Muslims only and it is enforced by the is enforced by the SyariahSyariah Courts.Courts.