1. Chapter 1 – Introduction to Law and the Malaysian Legal System
Business Law
Chapter 1 – Introduction to Law and the Malaysian Legal System

2. LEARNING OUTCOMES How Malaysian law is classified?
What are the sources of law?
What is the doctrine of Judicial Precedent?
How to cite cases and statutes?

3. Introduction What is Law?
Law may be defined as a body of RULES which are ENFORCED by the STATE
John Austin in his book “The Province of Jurisprudence Determined” defined law as a command set by a superior being to an inferior being enforced by sanctions (punishment)
Superior being – The State
Inferior being – The individual
Sanctions – Imprisonment, fines, damages, injunctions or specific performance

4. Law, The State and The Constitution
LAW IN MALAYSIA
Malaysia, which consists of Peninsular Malaysia, Sabah and Sarawak is one political unit, but is NOT governed by the same set of laws

5. Law, The State and The Constitution
There are 2 important links which unite the two parts of Malaysia – the Parliament and the Federal Court
Parliament can and does legislate for the whole country
Federal Court acts as a final court of appeal for the whole country

6. Law, The State and The Constitution
WHAT IS A “STATE”?
Legal systems are administered almost entirely on the basis of the political unit known as the State
For international purposes, Malaysia is one state
Within Malaysia, however, there are 13 States altogether – Kedah, Perlis, Kelantan, Terengganu, Penang, Perak, Pahang, Selangor, Negeri Sembilan, Johore, Malacca, Sabah and Sarawak and the Federal Territories of Kuala Lumpur, Labuan and Putrajaya
Every state has a government and has rules which lay who shall govern and how
Malaysia has a WRITTEN constitution

7. The Role of Parliament
To make laws of the country

8. Law Public Law (individuals & the State)
Private Law (individuals inter se)
International Law (Law that prevails between States)
Public International Law
Private International Law
Constitutional Law (Rights of individuals in the State)
Criminal Law (Offences against the State. Obligations imposed on individuals)
Contract (Rights and obligations that arise by agreement)
Tort (Offences against individuals)
Trust (Relationship between trustee and beneficiary)

9. Classification of Law Law can be classified into: - Public law
Private law
International law

10. Classification Public law
Relationship between the citizen and the State
Example
Constitutional law
Lays down the rights of individuals in the State
Criminal law
Offences committed by individuals against the State
Aims at punishing criminals and suppressing the crime
Imposes on individuals the obligation not to commit crimes
A crime is a wrong against the State for which punishment is inflicted by the State, the proceedings being brought by the Public Prosecutor

11. Classification Private law
Relationship between the citizen and another
Private or civil law is intended: -
to give compensation to persons injured,
to enable property to be recovered from wrongdoers, and
to enforce obligations (contracts & trusts)
Example – contracts, tort and trusts

12. Classification Private law Example
Law of contract determines when a promise or a set of promises is legally enforceable
A tort is a civil wrong and is the breach of a general duty imposed by the law (and not agreed between the parties)
A trust is an equitable obligation binding a person to deal with property over which he has control for the benefit of persons of whom he may himself be one and any one of the beneficiaries may enforce the obligation

13. International Law
Body of law which is composed for its greater part of the principles and rules of conduct which States feel themselves bound to observe, and consequently commonly do observe, in their relations with each other
Subdivided into: -
Public international law
Private international law

14. International Law Public international law
Law that prevails between States
Example: -
Climate Change – UNFCCC & Kyoto Protocol
Transboundary movement of toxic wastes – Basel Convention
Antarctic Region – Antarctica Treaty

15. International Law Private international law
“Conflict of laws” – every country there will be a different version of laws
It consists of the rules that guide a judge when the laws of more then one country affect a case

16. Sources of Law Malaysian law can be classified into: - Written law
Unwritten law

17. Sources of Law Written law is the most important source of law
It includes: -
The Federal and State Constitutions
Legislation enacted by Parliament and State Assemblies e.g. Act of Parliament, Ordinance, Enactments etc
Subsidiary legislation made by persons or bodies under powers conferred on them by Acts of Parliament or State Assemblies e.g. Rules and Regulations, By-Laws, Guidelines, etc.

18. 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
Unwritten law is found in cases decided by the courts, local customs, etc.
The unwritten law comprises the following: -
Principles of English law applicable to local circumstances
Judicial decisions of the superior courts, i.e. the High Courts, Court of Appeal and the Federal Court
Customs of the local inhabitants which have been accepted as law by the courts

19. 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

20. Sources of Law In short, the main sources are The Federal Constitution
The 13 Constitutions of the State
Federal Laws made by Parliament
State Laws made by the State Assemblies
Federal and State subsidiary legislation (delegated legislation)
Judicial decisions of the Superior Courts (Common law/judge-made laws)
Principles of English Law suitable to local circumstances
Islamic Law – applicable only to Muslims

21. The Federal Constitution
Malaysia is a Federation of 13 States with a written constitution, the Federal Constitution, which is the supreme law of the country
Lays down the powers of the Federal and State Governments and the basic or fundamental rights of the individual
Can only be changed by a two-thirds majority of the total number of members of the legislature

22. The Federal Constitution
The written constitution in Malaysia is called 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
In Repco Holdings Bhd. v. Public Prosecutor (1997), the court held that s126(2) of the Securities Industry Act and s39(2) of the Securities Commission Act to be unconstitutional, null and void

23. 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 or the Concurrent List

24. 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

25. 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

26. 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

27. 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

28. 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

29. The State Constitution
Each State possesses its own constitution regulating the government of that State
The State Constitution contains provisions which are enumerated in the 8th Schedule of the Federal Constitution
Some of these provisions include matters concerning the Ruler, The Executive Council, the Legislature, the Legislative Assembly, financial provisions, State employees, and amendment of the Constitution

30. 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

31. Legislation Date Enacted by Called After 1946 but before 1957
Parliament
Ordinance
After 1957
Act
State Legislative Assemblies (except Sarawak)
Enactment
Sarawak

32. Legislation Parliament and the State Legislatures are not supreme
They 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
Parliament is competent to enact laws on matters enumerated in List I of the Ninth Schedule
The State can enact laws on matters enumerated in List II (State List)
Matters on List III (Concurrent List) are within the concurrent competence of both authorities
Matters not enumerated in any of the lists are within the authority of the State

33. Legislative Process
Article 44 of the Federal Constitution vests the legislative authority of Malaysia in Parliament, comprising: -
The Yang di-Pertuan Agong
The two Houses of Parliament: -
Dewan Negara (Senate)
Dewan Rakyat (House of Representatives)

34. Legislative Process
Legislation is enacted by Parliament by introducing a Bill which is passed by both Dewan and assented to by the Yang di- Pertuan Agong

35. Legislative Process
A Bill may originate in either Dewan, although it most often originates in the Dewan Rakyat
Bills concerning tax or expenditure (Money or Supply Bills) must originate in the Dewan Rakyat
The legislative process outlined focuses on government Bills that originate in the Dewan Rakyat
There are two main stages in the process:
Pre-Parliamentary
Parliamentary

36. Legislative Process In each Dewan, the Bill goes through four stages
First Reading
Second Reading
Committee Stage
Third Reading

37. Pre-Parliamentary Stage
Government Proposal
Meetings between relevant government authorities
Drafting of Bill by Parliamentary Draftsperson
Cabinet approval of Bill
Pre-Parliamentary Stage
Parliamentary Stage
Minister formally introduces the Bill in the Dewan Rakyat by having its short title read
First Reading
Second Reading
Debate on the general principles of the Bill, followed by a vote – simple majority or a two-thirds majority of the total number of members of the Dewan
Detailed examination of the Bill and consideration of amendments, followed by a report on the Bill to the Dewan
Committee Stage
Further debate on the general principles of the Bill, followed by a vote
Third Reading
Similar procedures as in the Dewan Rakyat. If passed, the Bill is referred back to the Dewan Rakyat
Dewan Negara
The Yang di-Pertuan Agong affixes the Public Seal within 30 days of presentation. When assent is not affected within the specified time, the Bill becomes law as if it had been assented to. Bill becomes an Act
Royal Assent
Publication
Act comes into force

38. Dewan Negara
When the Bill is passed with or without amendments by the Dewan Negara, it is returned to the Dewan Rakyat
Any disagreement between the two Dewan over any amendments are resolved by the appointment of a joint committee by both Dewan under Article 66(3) of the Federal Constitution
The Dewan Negara has no power to veto, reject or insist on its amendments to a Bill passed by the Dewan Rakyat
Under Article 68 of the Federal Constitution, the power of the Dewan Negara is restricted to delaying the passage of the Bill – one month if it is a Money Bill and 12 months if it is a non-Money Bill

39. Dewan Negara
If the Dewan Negara does not pass the Bill or persists to disagree with the Dewan Rakyat on its proposed amendments, the Bill will be presented for Royal Assent at the end of the specified period
The only exception is a Bill amending the Federal Constitution
Such a Bill is required by the constitution to decide by the requisite majority in each Dewan
Such a Bill cannot be presented for the Royal Assent until it has been passed by both Dewan

40. Subsidiary Legislation
An Act of Parliament or statute is brought into being by Parliament through the parliamentary process which is long and involves several stages
Parliament now produces annually a very large output of new legislation in the form of Acts of Parliament
This legislation is an attempt to regulate very complex matters such as employment, social security, tax liability and economic management

41. Subsidiary Legislation
It would be impossible to include in the Acts of Parliament all relevant details of these subjects
Moreover, during the period of validity of a statute, it may be necessary to vary some of these details, e.g. in a period of severe inflation it will be necessary from time to time to increase the amount of excise duties if they are to be maintained as a constant proportion of the current retail selling price

42. Subsidiary Legislation
The need to fill in and to vary the details of statute law is met by conferring, usually on the minister concerned, a statutory power to make regulations for defined purposes of the main statute
This is called subsidiary legislation or delegated legislation, since the parent Act delegates to some executive authority power to legislate in this way
A parent Act often confers similar powers upon local authorities to legislate by way of bye-laws
The reason for there to be subsidiary legislation is because Parliament does have the time nor the expertise to examine the regulation of every industry or aspect of the community
Subsidiary legislation give to certain bodies or people the right to make ‘legislation’.

43. Subsidiary 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”
Such persons or bodies include the Yang di- Pertuan Agong, Ministers, local authorities etc.
It is void if it contravenes the parent Act or the Constitution

44. Subsidiary Legislation
Why is subsidiary legislation important?

45. Subsidiary Legislation
It is important because: -
Legislation by Parliament and the State Legislatures is insufficient to provide laws required to govern everyday matters
Subsidiary legislation deals with the details about which legislature has neither the time nor the technical knowledge to enact laws
Legislature merely lays down the basic and main laws, leaving the details to persons or bodies to whom they delegate their legislative powers

46. Subsidiary Legislation
Limitations: -
Such legislation is made under powers given by Parliament and it is considered appropriate to some cases that Parliament should supervise the exercise of those delegated powers
The second main limitation is the doctrine of ultra vires. The power to make delegated legislation is given for specified purposes and such legislation is invalid if it exceeds the scope of the delegated power to legislate

47. The Common Law
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, High 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”

48. The Common Law Judges do not decide cases arbitrarily
They follow certain accepted principles commonly known as precedents
Precedents are basically decisions made by judges previously in similar situations
Example, if the Federal Court made a certain decision in 1987 and assuming the facts and situations before a High Court judge deciding a case in 1990 are similar to the said Federal Court case, the High Court judge must decide the case before him by applying the principles laid down by the Federal Court in 1987

49. 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

50. 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

51. The Common Law Hierarchy of Precedents
The general rule regulating the hierarchy of precedents is based on the principle that decisions of higher courts bind lower courts and some courts are bound by their own decisions

52. High Court in Sabah & Sarawak
Federal Court
Court of Appeal
High Court in Malaya
High Court in Sabah & Sarawak
Syariah Court
Native Court &
Syariah Court
Sessions Court
Sessions Court
Magistrates’ Court
Magistrates’ Court
Small Claims Court
Small Claims Court
Penghulu’s Court

53. 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 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

54. The Common Law
What are the advantages and disadvantages of judicial precedents?

55. The Common Law Advantages
Since the law is a result of an actual dispute rather than a hypothetical situation, it is more practical since it evolved through actual experiences and not a result of abstract theory
It is more flexible when compared to statute law enacted by Parliament
Case law is richer in legal detail than statute law
It provides greater certainty in the law.

56. 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
It is sometimes difficult to tell whether a particular statement in a judgment is 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

57. English Law Forms part of the laws of Malaysia
Can be found in the English common law and rules of equity

58. English Law
However, not all the English common law and rules of equity form part of Malaysian law
S3(1) of the Civil Law Act 1956 (Revised 1972) 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 and Sarawak, the courts shall apply the common law of England and the rules of equity, together with statutes of general application, as administered or in force in England on the 1st day of December 1951 and the 12th day of December 1949 respectively

59. English Law
However, the Supreme Court in Commonwealth of Australia v Midford (Malaysia) Sdn. Bhd. & Anor held that the developments of common law after 1956 may well be applicable in Malaysia

60. 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
Only part of the English law that is suited to local circumstances will be applied (proviso to s3(1) Civil Law Act)

61. 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

62. Native Law
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

63. Citation of Cases and Statutes
A case is normally cited in support of a legal proposition and this is done by qouting the name, date, volume number and first page of the report
Tan Bing Hock v Abu Samah [1968] 2 MLJ 221
Plaintiff – Tan Bing Hock
Defendant – Abu Samah
Reported in the Malayan Law Journal of 1968, Volume 2 at page 221
Act of Parliament – Hire-Purchase Act 1967

64. QUESTIONS