BUSINESS LAW

(LAW 416)
MALAYSIAN LEGAL
SYSTEM
 Objective
™ To enable students to understand the
sources of law, the Court’s 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 State English Judicial Custom

Constitution Constitution Law Precedent

Legislation
Common Equity
Law

Subsidiary Legislation
 Written Law
• It is the most important source of law.
• It refers to that portion of Malaysian
law which includes the following:
1) The Federal Constitution.
2) The State Constitutions.
3) Legislation.
4) Subsidiary legislation.
 Written Law
1) The Federal Constitution
ƒ 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.
ƒ Besides laying down the powers of the Federal and
State Governments, the FC enshrines the basic or
fundamental rights of the individual.
ƒ 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.
Cont’d
ƒ The FC establishes a constitutional monarchy
and a federal system of government.
ƒ Under the federal system, there is a division
of legislative powers between the central
Parliament and the State Legislative
Assemblies.
ƒ 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.
ƒ The State Legislature may make laws with
respect to any of the matters enumerated in
the State List or the Concurrent List.
 Federal List Concurrent List State List
1. External 1. Social welfare, 1. Islamic law and
affairs social services, personal and
2. National protection of family law of
defence women, children Muslims; Malay
3. Internal and young customs,
security persons offences by
2. Scholarships Muslims;
4. Civil and Syariah Courts.
criminal law 3. Town and country
planning 2. Land
5. Finance
4. Drainage and 3. Local
6. Trade, government
commerce, irrigation
industry 5. National Parks, 4. State
etc. holidays,etc
7. Education,
etc
2) The State Constitutions

ƒ Each State possesses its own constitution

regulating the government of that State.
ƒ The State Constitution contains provisions
which are enumerated in the Eighth Schedule
to the Federal Constitution.
ƒ 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
ƒ Legislation refers to law enacted by a body
constituted for this purpose.
ƒ In Malaysia, laws are legislated by Parliament
at federal level and by the various State
Legislative Assemblies at state level.
ƒ 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.
ƒ 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).
Cont’d
ƒ Parliament and the State Legislatures have to
enact laws subject to the provisions set out in
the Federal and State Constitutions.
ƒ The subject matter for legislation is divided
between the Federal and State Governments
as provided by the Ninth Schedule of the FC.
ƒ 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
ƒ SL is also known as subordinate legislation or
delegated legislation.
ƒ 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’.
ƒ SL is very important as legislation by Parliament and
the State Legislatures is insufficient to provide the
laws required to govern everyday matters.
ƒ SL deals with the details about which legislature has
neither the time nor the technical knowledge to enact
laws.
Cont’d
ƒ Legislature merely lays down the basic and
main laws, leaving the details to persons or
bodies to whom they delegate their legislative
powers.
ƒ Such persons or bodies include the Yang di-
Pertuan Agong, Ministers and local
authorities, among others.
ƒ A rule or regulation that is properly enacted is
as much a law as the parent statute.
ƒ SL made in contravention of either a Parent
Act or the Constitution is void.
ƒ 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 England’s 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).
Cont’d
• 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.
Cont’d
• 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.
Cont’d
• 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.
Cont’d
• 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 (Malaya) High Court

(Sabah & Sarawak)
-- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Native
Syariah Court &
Court Syariah
Sessions Court Sessions Court Court

Magistrates’ Court Magistrates’ Court

Penghulu’s Court

# The present Court system

 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) High Court (Borneo) SUPERIOR COURTS

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - --
Syariah SUBORDINATE
Court Native COURTS
Court &
Syariah
Sessions Court Sessions Court
Court

Magistrates’ Court Magistrates’ Court

Penghulu’s 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 Native
Court Court &
Syariah
Sessions Court Sessions Court
Court

Magistrates’ Court Magistrates’ Court SUBORDINATE

COURTS

Penghulu’s Court

*through the YDPA

 Distinguishing Precedents
• It is not in every case that judges apply earlier
precedents. A judge may not wish to apply
precedents in the following circumstances:
1. Judges may ignore or overrule a precedent
laid down by a lower court, where the case is
on appeal.
2. 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).
3. 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
• There are advantages in applying the
system of binding judicial precedents:
1. The law evolved is more practical since it
evolved through actual experiences.
2. It is more flexible compared to statute
law.
3. 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.
Cont’d
• 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.