Topic 1 Malaysian Legal System

Topic 1: Introduction to
Malaysian Legal System

WHAT IS ‘LAW’?
 It is a set of rules that regulates interactions that people

have with each other, and which sets standards of
conduct between individuals and between individuals
and the government and which are enforceable through
sanction.
 To the layman, law is understood as being a general
rule of conduct.
 The Oxford English Dictionary defines law as ‘the body
of enacted or customary rules recognized by a
community as binding’.
BUSINESS LAW (THIRD EDITION) All Rights Reserved

© Oxford Fajar Sdn. Bhd. (008974-T), 2018 1–3
WHAT IS ‘LAW’? (cont.)
• the term ‘law’ is defined both by Article 160(2) of

the Federal Constitution 1957 and Item (43C) of
section 2(1) of the Interpretation and General
Clauses Ordinance 1948 to include:
(a) the written law
(b) common law insofar as it is in operation in the
Federation or any part thereof
(c) any custom or usage having the force of law in
the Federation or in any part

LAW IN RELATION TO JUSTICE
Law aims to maintain justice in society.

• Justice is an abstract idea of right and wrong;
fairness and equality.
• The aim of a given law is to encourage the doing
of what is right or just in a particular set of
circumstances.
• Justice is what right-minded members of the
community (that is, those having the right spirit
within them) believe to be fair.
LAW IN RELATION TO
JUSTICE
• Law attempts to represent what society believes

is right or fair.
• However, in its application to a particular set of
circumstances, a law may not always appear to
be just.

CLASSIFICATIONS OF LAW
Major legal systems:

• Civil law
• Common law
• Islamic
• Sino-Soviet
• Hindu
• Talmudic

CLASSIFICATION OF LAW

CLASSIFICATIONS OF LAW (cont.)
• in general, the legal systems of the world are classified

into 3 main types:
a) Civil law
b) Common law
c) Socialist law
• the Malaysian legal system is a common law system
• in Malaysia, law has been classified into 3 broad
divisions:
a) Public law
b) International law
c) Private law

PUBLIC LAW
• law which governs the relationship between

individuals and the state
• subdivided into two categories:
a) Constitutional law
b) Criminal law
• constitutional law lays down the rights of
individuals in the state
• criminal law codifies the various offences
committed by individuals against the State

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 two categories:

– Public international law
• Law that prevails be

INTERNATIONAL LAW (cont.)
– Private international law (‘conflict of laws’)

• A part of municipal law
• Rules that guide a judge when the laws of more
than one country affect a case
• two main sources of international law that affect
businesses:
a) Customary Rules of International Law
b) Treaties and Conventions

PRIVATE LAW (CIVIL LAW)
• matters that affect the rights and duties of

individuals amongst themselves
• intended to give compensation to persons
injured, to enable property to be recovered from
wrongdoers, and to enforce obligations
(contracts and trusts)
• covers:
– Contract
– Tort
– Trust
PRIVATE LAW (CIVIL LAW) (cont.)
Contract
• based on agreement
• essential elements in a contract:
1. Offer
2. Acceptance
3. Capacity to contract
4. No mistake, misrepresentation or
undue influence
5. Object must be lawful
6. Intention to enter into legal relations
7. Consideration
Tort
• based on an obligation imposed by law
• a civil wrong
• the breach of a general duty which is imposed
by the law (and not agreed between the
parties)
• remediable by a civil action for unliquidated
damages

• any person whose legal right is infringed

may sue that wrongdoer
• essential elements of a tort:
– there must be an act or omission done
intentionally or negligently
– there must be damage caused by such
act or omission which is not remote

Trust
• an equitable obligation binding a person (a
trustee) to deal with property over which he
has control (trust property) for the benefit of
persons (beneficiaries or cestui que trust) of
whom he may himself be one and any one of
the beneficiaries may enforce the obligation

SOURCES OF
MALAYSIAN LAW

WRITTEN LAW & UNWRITTEN LAW
WRITTEN LAW UNWRITTEN LAW
◦ Written law is contained in a ◦ Unwritten law has not been

formal document. formally enacted.
◦ Written law is passed by a ◦ Unwritten law consists of case
person or body authorised to law or judicial decisions (i.e.
pass law. decisions of superior courts are
◦ Malaysia has a written binding on lower courts),
constitution. customary law (i.e. local
◦ Written law consists of Federal customs accepted as law by
and State Constitutions, courts) and applicable principles
legislation passed by Parliament of English common law and
and State Legislative equity.
Assemblies and subsidiary
legislation
◦ Written law is the most
important source of law in MYS
THE FEDERAL CONSTITUTION
 supreme law of the country

 applies to all States in the Federation
 laying down the powers of the Federal and
State Governments
 enshrines the basic or fundamental rights of the
individual

STATE CONSTITUTION
• each State possesses its own constitution

• contain provisions which are enumerated
in the Eighth Schedule
• Federal Constitution
• some of these provisions include matters
concerning the Ruler

STATE CONSTITUTION (cont.)
• the Executive Council, the Legislature, the

Legislative Assembly, financial provisions, State
employees, and amendment to the Constitution
• if such essential provisions are missing, or if any
provision is inconsistent with them, Parliament
may make provision to give effect to them or to
remove any inconsistencies, as the case may be
– Article 71, Federal Constitution

LEGISLATION
• law enacted by a body constituted for this purpose

• legislated by Parliament at federal level and by the
various State Legislative Assemblies at state level
• laws that are enacted by Parliament after 1946 but
before Malaysia’s Independence in 1957 –
Ordinances
• those made after 1957 – Acts
• laws made by the State Legislative Assemblies
(except in Sarawak) – Enactments
• laws in Sarawak – Ordinances
SUBSIDIARY LEGISLATION
• Interpretation Act 1967: ‘any proclamation, rule,

regulation, order, notification, by-law or other instrument
made under any Ordinance, Enactment or other lawful
authority and having legislative effect’
• deals with the details about which the legislature has
neither the time nor the technical knowledge to enact
• if made in contravention of either a parent Act or the
Constitution is void – an exception to this rule is the
proclamation of emergency under Art 150 of the Federal
Constitution
• see Eng Keock Cheng v Public Prosecutor
UNWRITTEN LAW
• portion of Malaysian law which is not

written
• comprises:
1. English law
2. Judicial decisions
3. Customs

1. English common law and equity
◦ English law forms part of the law in Malaysia.
◦ English law will apply to the local circumstances.
◦ s.3 (1) Civil Law Act 1956 allows application of English Law:
(i) only in the absence of local statutes on the particular subject.
(ii) Only the part of English law that is suited to local circumstances
will apply.
◦ Sections 3 (1) and 5 (1) Civil Law Act 1956 specifically permit
reception of English common law and equity in Malaysia subject
to limitations contained therein.
◦ English law may only apply where:
(1) there is no local law governing the matter and
(2) if it is suitable to local circumstances.
ENGLISH LAND LAW
• section 6 of the Civil Law Act 1956

• see United Malayan Banking Corporation Bhd &
Anor v Pemungut Hasil Tanah, Kota Tinggi
Conflict between Common Law and Equity

• section 3(2) of the Civil Law Act 1956 – in the event
of conflict or variance between the common law and
the rules of equity with reference to the same matter,
the rules of equity shall prevail

JUDICIAL DECISIONS
• Malaysian law can also be found in the judicial

decisions of the High Court, Court of Appeal and
the Federal Court, the then Supreme Court and
the Judicial Committee of the Privy Council
• decisions of these courts were made and still are

being made by the ‘doctrine of binding precedent’

PRECEDENT
• is basically a judgment or decision of a court of

law cited as an authority for the legal principle
embodied in its decision
• may comprise:
– res judicata – final order of the court binding the
immediate parties to the decision
– ratio decidendi – the reason for the decision
– obiter dictum (sayings by the way) – no binding power,
although it can exercise an extremely strong influence
in a lower court, and even in a court of equivalent
standing, depending on the court and the judge
PRECEDENT (cont.)
• ‘following a precedent’ means that a question

should be resolved in a certain way today because
a similar question has been so decided before
• this process of following an established procedure
is called stare decisis which literally means ‘to
stand by a decision’
• advantages of precedents:
– promote consistency, coherence and certainty
– promote efficiency and justice, ensuring equality and
fairness

PRECEDENT (cont.)
 disadvantages of precedents:
– certain precedent may not be relevant in today’s
circumstances but the judge may have to nevertheless
follow it
– may also be slow in responding to community changes
and it is cumbersome to change them as they may
require an Act of Parliament
 in applying binding precedents, Malaysian law can
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
PRECEDENT (cont.)
• decisions of these courts were made, and are still being

made, systematically by the use of what is called the
‘doctrine of binding judicial precedent’
• in the case of a binding precedent (the ratio decidendi of
an earlier case decision), each court is bound by the
decisions of courts of the same level or higher than it, in
the same hierarchy of courts
• if a judge applies an existing rule of law without extending
it, his decision may be called a declaratory precedent
• if the case before a judge is without precedent, then the
decision made by him may be called an original
precedent
CUSTOMS
• 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
• 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
• in Sabah and Sarawak, native customary laws
apply in land dealings over native customary lands
and family matters
CUSTOMS (cont.)
• in Peninsular Malaysia there are two main varieties

of Malay customary law: the adat perpatih and the
adat temenggong
Adat Perpatih
• prevalent among Malays in Negeri Sembilan and Naning
in Malacca
• effective in matters such as land tenure, lineage and the
election of lembaga, undang and the Yang di-Pertuan
Besar
• noted for its matrilineal system

CUSTOMS (cont.)
Adat Temenggong
• practised by the other states
• originated from Palembang, Sumatra
• patrilineal system of law

ISLAMIC LAW
• each State has the power to administer Islamic Law

• the head of the Muslim religion in a state (except for
Penang,Malacca, Sabah, Sarawak and the Federal
Territories) is the Sultan
• in Penang, Malacca, Sabah, Sarawak and the Federal
Territories, the Yang di-Pertua Negeri is the head
• the courts enforcing Islamic law – the Syariah Courts
• Islamic law applies to Muslims only
• in businesses, esp. areas of banking and finance,
Islamic principles are increasingly relevant in lending
and investments

Judicial System in
Malaysia
THE COURT SYSTEM
The court system may be illustrated as follows:

SUBORDINATE COURTS IN
PENINSULAR MALAYSIA
• the subordinate courts in Peninsular

Malaysia are:
1. Magistrates’ Courts
2. Sessions Courts

MAGISTRATES’ COURTS
• deals with minor civil and criminal cases

• presided over by a magistrate
• according to section 85 of the Subordinate Courts
Act 1948 (Revised 1972) amended by the
Subordinate Courts (Amendment) Act 1978, a first
class magistrate possesses jurisdiction to try:
– all offences for which the maximum term of
punishment provided by law does not exceed ten
years’ imprisonment
– all offences punishable with fine only

MAGISTRATES’ COURTS (cont.)
– offences under sections 392 and 457, Penal Code

where a person is found guilty, the magistrate may
pass any sentence allowed by law not exceeding:
1. Five years’ imprisonment
2. A fine of ten thousand ringgit
3. Whipping of up to twelve strokes
4. A combination of any of the above-mentioned

(cont.)
• a second class magistrate:

– has jurisdiction to try offences for which the maximum
term of imprisonment provided by law does not exceed
twelve months’ imprisonment
– may try offences punishable with a fine only
– may pass any sentence allowed by law:
1. Not exceeding six months’ imprisonment
2. A fine of not more than one thousand ringgit
3. Any sentence combining either of the aforesaid sentences

(cont.)

(cont.)
• the second class magistrate:

– jurisdiction to try original actions or suits of a civil
nature where the plaintiff seeks to recover a debt
or liquidated demand on money payable by the
defendant, with or without interest, not exceeding
RM10,000

‘SMALL-CLAIMS’ COURT
• set up to decide on claims for recovery of

debts or liquidated demands in money, with
or without interest, and not exceeding
RM5,000 at the date of filing
• unique features – it is cheap and no legal
representation is allowed

COURTS FOR CHILDREN
• the Child Act 2001 established the Court for Children

• set up to deal with criminal offenders below the age of
eighteen
• consists of a magistrate who may be assisted by two
advisers, one of whom shall, if practicable, be a woman
• jurisdiction to try all offences except those punishable by
death
• Malaysia opened its first court to deal with cases
involving sexual crimes against children on 22 June
2017

SESSIONS COURTS
• highest of the subordinate or inferior courts

• under the charge of the Sessions Court judge
• criminal jurisdiction extends to all offences other than
offences punishable by death
• in civil matters, it has jurisdiction to try all actions and suits
of a civil nature where the amount in dispute or value of the
subject-matter does not exceed RM1,000,000.00
• matters relating to land, specific performance or recession
of contracts, injunction, probate and administration of
estates, divorce, bankruptcy, trusts, and accounts are
excluded from its jurisdiction

SESSIONS COURTS (cont.)
• application must be made to the High Court:

1. Most land matters
2. Enforcement of trusts
3. Accounts
4. Declaratory decrees except interpleader proceedings
5. Issue or revocation of grants of representation of the estates
of deceased persons or the administration or distribution of
estates
6. Legitimacy
7. Guardianship or custody of infants
8. Validity or dissolution of marriage

• the Sessions Court may exercise jurisdiction

to hear and determine any action:
– for the recovery of immovable property
– And to issue writs or warrants of distress for rent

NATIVE COURTS
• peculiar only to Sabah and Sarawak

• exercises jurisdiction over matters affecting
‘native customs’ where the parties are natives
• previously, the Native Court also possessed
jurisdiction over matters concerning Muslim
law. Muslim law in Sabah and Sarawak is now
administered by a separate system of Muslim
courts, the Shariah Courts

NATIVE COURTS (cont.)
• Native Courts are empowered to try civil and

criminal matters such as:
– cases arising from breach of native law or custom
– cases involving land where there is no title issued by
the Land Office and in which all the parties are
subject to the same native system of personal law
– civil cases (excluding land) where the value of the
subject-matter does not exceed RM50 and all parties
are subject to the same native system of personal law


• in Sabah:
– original jurisdiction is exercised by the Native Court
with the District Officer acting in a supervisory-cum-
appellate capacity
– in his appellate capacity, the District Officer hears
appeals from any order of a Native Court
– an appeal from any order of the District Officer lies to
a Native Court of Appeal presided over by a judge of
the High Court
– the Appeal Court also comprises the Resident of the
residency in which the original proceedings took
place and one native chief duly appointed
• in Sarawak:
– District Native Court, comprising a Magistrate, a
Native Officer and two assessors, possesses the
widest jurisdiction
• may impose a term of imprisonment not exceeding
two years and a fine not exceeding RM200

• any party who is aggrieved by the decision of any

Native Court may appeal to a higher court – see
the Native Court System below:

• the Resident’s Native Court and the Native

Court of Appeal exercise only appellate
jurisdiction
• the Native Court of Appeal is presided over by
a judge with powers similar to those of a High
Court judge
• see Ongkong anak Salleh v David Panggau
Sandin & Anor

MAGISTRATES’ COURTS, COURTS FOR
CHILDREN AND SESSIONS COURTS
• basically operate in a way similar to their

counterparts in Peninsular Malaysia and are
governed by the same statutes

SUPERIOR COURTS IN MALAYSIA
• comprises:
– High Courts – the High Court of Malaya and the High
Court in Sabah and Sarawak
– Industrial Court
– Court of Appeal
– Federal Court
• the jurisdiction of the High Court is original,
appellate and supervisory
• in the exercise of its original jurisdiction, it has
unlimited criminal and civil powers
• any civil matter which cannot be determined in the
subordinate courts is heard before the High Court
THE HIGH COURT
• has the jurisdiction to try all civil proceedings

where:
1. The cause of action arose within Malaysia
2. The defendant(s) resides or has his place of
business within Malaysia
3. The facts on which the proceedings are based,
exist or are alleged to have occurred within
Malaysia
4. Any land the ownership of which is disputed is
situated within Malaysia

THE HIGH COURT (cont.)
• has the power to refer any points of law arising in

the appeal for the decision of the Court of Appeal
• general supervisory and revisionary jurisdiction
over all subordinate courts
• High Court of Malaya in Kuala Lumpur is
reorganized into:
1. Commercial Division
2. Appellate and Special Powers Division
3. Civil Division
4. Criminal Division

INDUSTRIAL COURT
• exercise judicial or quasi-judicial functions

• constituted under the Industrial Relations Act 1967
• deals primarily with trade disputes and therefore has
jurisdiction over matters concerning employers,
employees and trade unions
• reference may be made to the High Court on
questions of law
• see Cheek Hong Leong v Kym Industries (M) Sdn
Bhd, Mas Golden Boutique Sdn Bhd v Md Zain Abu,
Johor v Mohd Zain bin Haji Idris

COURT OF APPEAL
• jurisdiction to hear and determine any appeal

against any High Court decision on criminal matters
• jurisdiction to hear and determine civil appeals
generally for cases where the amount or value of
the subject-matter of the claim is at least
RM250,000
• has no power to re-open, rehear nor to re-examine
its decision for whatever purpose
• see Lye Thai Sang & Anor v Faber Merlin (M)
Sdn Bhd & Ors

FEDERAL COURT
• the highest court in Malaysia

• has the jurisdiction to:
1. Hear civil and criminal appeals from the Court of Appeal
2. Exercise exclusive original jurisdiction on those matters
conferred on it under Art 128(1) and (2), Federal Constitution
3. Determine constitutional questions which have arisen in
the proceedings of the High Court but referred to the Federal
Court for a decision
4. Give its opinion on any question referred to it by the Yang
di-Pertuan Agong concerning the effect of any provision of the
Constitution

SPECIAL COURT
• hears cases of offences or wrongdoings made

by a Ruler
• prior to the formation of this court, a Ruler was
immune from any proceedings brought against
him in his personal capacity
• governed by the Rules of the Special Court
1994
• see DYTM Tengku Idris Shah Ibni Sultan Shah
Ibni Sultan Salahuddin Abdul Aziz Shah v
DIKIM Holdings Sdn Bhd & Anor
ALTERNATIVE METHODS OF
DISPUTE RESOLUTION
• 3 methods:
1. Mediation
2. Conciliation
3. Arbitration
Examples:
– Small Claims Court
– Consumer Claims Tribunals
– Financial Mediation Bureau
– Kuala Lumpur Regional Centre for Arbitration (KLRCA)

MEDIATION
• facilitative process for resolving disputes

quickly and cheaply
• role of the mediator is a determinative one

CONCILIATION
• conciliator may exercise an advisory or

directive role in assisting the parties to identify
the dispute in question, develop options,
determine what alternatives are available, and
try to reach an agreement

ARBITRATION
• means of settling commercial disputes

• a formal dispute resolution process which involves the
hearing of a dispute by an independent third party (an
arbitrator). At the end of the hearing the arbitrator will
make an award unless the parties have expressed a
contrary intention, and the award will be final and
binding on the parties
– is a determinative process
– Arbitration Act 2005, section 9(1):
• ‘arbitration agreement’ – “an agreement by the parties to submit to
arbitration all or certain disputes which have arisen or which may
arise between them in respect of a defined legal relationship,
whether contractual or not”

Topic 1 Malaysian Legal System

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Topic 1: Introduction to

Malaysian Legal System

 It is a set of rules that regulates interactions that people

BUSINESS LAW (THIRD EDITION) All Rights Reserved

• the term ‘law’ is defined both by Article 160(2) of

BUSINESS LAW (THIRD EDITION) All Rights Reserved

Law aims to maintain justice in society.

• Law attempts to represent what society believes

BUSINESS LAW (THIRD EDITION) All Rights Reserved

Major legal systems:

BUSINESS LAW (THIRD EDITION) All Rights Reserved

BUSINESS LAW (THIRD EDITION) All Rights Reserved

• in general, the legal systems of the world are classified

BUSINESS LAW (THIRD EDITION) All Rights Reserved

• law which governs the relationship between

BUSINESS LAW (THIRD EDITION) All Rights Reserved

• body of law which is composed for its greater

• subdivided into two categories:

BUSINESS LAW (THIRD EDITION) All Rights Reserved

– Private international law (‘conflict of laws’)

BUSINESS LAW (THIRD EDITION) All Rights Reserved

• matters that affect the rights and duties of

BUSINESS LAW (THIRD EDITION) All Rights Reserved

• any person whose legal right is infringed

BUSINESS LAW (THIRD EDITION) All Rights Reserved

BUSINESS LAW (THIRD EDITION) All Rights Reserved

BUSINESS LAW (THIRD EDITION) All Rights Reserved

◦ Written law is contained in a ◦ Unwritten law has not been

 supreme law of the country

BUSINESS LAW (THIRD EDITION) All Rights Reserved

• each State possesses its own constitution

BUSINESS LAW (THIRD EDITION) All Rights Reserved

• the Executive Council, the Legislature, the

BUSINESS LAW (THIRD EDITION) All Rights Reserved

• law enacted by a body constituted for this purpose

• Interpretation Act 1967: ‘any proclamation, rule,

• portion of Malaysian law which is not

BUSINESS LAW (THIRD EDITION) All Rights Reserved

• section 6 of the Civil Law Act 1956

Conflict between Common Law and Equity

BUSINESS LAW (THIRD EDITION) All Rights Reserved

• Malaysian law can also be found in the judicial

• decisions of these courts were made and still are

BUSINESS LAW (THIRD EDITION) All Rights Reserved

• is basically a judgment or decision of a court of

• ‘following a precedent’ means that a question

BUSINESS LAW (THIRD EDITION) All Rights Reserved

• decisions of these courts were made, and are still being

• generally, customs relating to family law, i.e.

• in Peninsular Malaysia there are two main varieties

BUSINESS LAW (THIRD EDITION) All Rights Reserved

BUSINESS LAW (THIRD EDITION) All Rights Reserved

• each State has the power to administer Islamic Law

BUSINESS LAW (THIRD EDITION) All Rights Reserved

BUSINESS LAW (THIRD EDITION) All Rights Reserved

• the subordinate courts in Peninsular

BUSINESS LAW (THIRD EDITION) All Rights Reserved

• deals with minor civil and criminal cases

BUSINESS LAW (THIRD EDITION) All Rights Reserved

– offences under sections 392 and 457, Penal Code

BUSINESS LAW (THIRD EDITION) All Rights Reserved

• a second class magistrate:

BUSINESS LAW (THIRD EDITION) All Rights Reserved