Lecture 1 Introduction to Business Law & The Malaysian Legal

System

Dual legal System in Malaysia Syariah and Secular Law

Classification of LawPublic & PrivateCivil & Criminal

Courts and Dispute ResolutionsHierarchy Tribunals, Mediation Bodies/Authorities, ArbitrationSyariah Courts

Abdul Majid bin Nabi Baksh & Krishnan Arjunan, 2005, Business Law in Malaysia, Lexis Nexis, Malayan Law Journal

Lee Mei Pheng & Ivan Jerone Detta, 2009, Business Law, Oxford University Press

Common definition – body of ‘rules of behaviour’ a particular society accepts as appropriate for its own self-governance.

The Law is different things to different people.

- Politicians – expression of govt policy.- Lawyers – tool to be manipulated- Poor people – inaccessible - too expensive- Rich People – use it to outwit authorities e.g.

tax- Police – source of power.

Permit, modify or prohibit people’s activities within society

Give people & businesses rights and responsibilities Regulate society’s behavior. some acts both morally and legally wrong e.g.

murder, theft some acts legally wrong - not morally wrong e.g.

parking at no parking zone, making illegal u-turn, speeding.

some acts not morally wrong but illegal – smoking in restaurant, smoking pot, blogging, burning CDs

Syariah Law for those who profess the Islamic faith. Limited to matrimonial, family matters and inheritance. Dealt by the Syariah Courts. Syariah Laws enacted by the state and enforced by the Syariah Courts of each state.

Secular Law classified as –1. Civil/Criminal LawCivil Law – confers rights of enforcement

on individual if breached by another individual in court to get remedy.

Criminal Law – regulates social behavior - when crime committed, state enforces law to punish offender. State (AG/Prosecutor) v individual.

2. Public/Private Law Public Law – governs individual and state e.g.

Constitutional/Administrative Law, Criminal Law.- Administrative law – regulates duties & exercise of

powers by administrative authorities.- Constitutional Law – defines structure of govt and

rights of individuals in state – found mostly in Federal Constitution. Ex: freedom of speech.

- Criminal Law – laws against commission of offences or crime e.g. murder, forgery, theft, robbery etc. Imposes punishment and is prosecuted by state.

Private Law – affects rights & duties of individuals amongst themselves e.g. Property, Family, Company & Partnership, Contract, Tort.

Aim - compensate injured/aggrieved party, recovery of property.

Federal Court – highest judicial authority in country. Established under to Art. 121(2) of Federal Constitution. Headed by CJ. Hears appeals from Court of Appeal.

Special Court - Established under Art. 182 of Federal Constitution to hear any action civil or criminal instituted by or against King or any of 9 Malay Rulers. Not part of hierarchy of courts in M’sia.

Court of Appeal has– (a) jurisdiction to determine appeals from decisions of High Court; and(b) such other jurisdiction as may be provided for under any federal law.In civil cases, CA hears appeal if amount/value of subject matter of claim > RM250,000

High Courts – - 2 High Courts with coordinate jurisdiction and

status - 1 in Malaya and 1 in Sabah & Sarawak.- Jurisdiction and powers found in Courts of

Judicature Act 1964.- jurisdiction to try all criminal offences e.g.

murder, drug trafficking.- Hears all civil cases where amt claimed or in

dispute > RM250,000.- Hears appeals from the lower courts.

consist of the Sessions Crt, Magistrate’s Crt and Crt for Children. Sessions Court presided by Sessions Crt judge. Magistrate’s Crt and Crt for Children presided by magistrates.

jurisdiction and powers stated in Subordinate Courts Act 1948.

Sessions crt can try all criminal offences except those punishable by death.

Civil cases – amount < RM250,000.

Magistrates Courts First Class Magistrate can to try all offences

where max. sentence < 10 years imprisonment or fine only.

First Class Magistrate can hear civil cases where amount in dispute < RM25,000.00.

Second Class Magistrate can try all cases where maximum sentence < 12 months imprisonment or fine only.

Second Class Magistrate can hear all civil cases where the amount in dispute < RM5,000.00.

Court For Children - established under Child Act 2001. S. 2 defines “Child”

as person < 18 years, and for criminal proceedings, person who has attained the age of 10.

consist of magistrate and, if required, be assisted by two advisors (s. 11(2) Child Act 2001).

Only officers of crt, children who are parties to case & parents can be in crt (s. 12 Child Act 2001).

If child found guilty of offence, he shall not be imprisoned, but may either be sent to approved school or released on bail. For capital offences, child shall be detained in prison at pleasure of Ruler (s. 91-97 Child Act 2001).

Penghulu’s Court –Only in West Malaysia. Limited civil and

criminal jurisdiction.

Civil jurisdiction – amt of claim < RM50.

Criminal jurisdiction – offences of minor nature. Maximum punishment is fine of RM25.

Native Court (Sabah and Sarawak only) established in Sabah & Sarawak under Native

Courts Ordinance 1992 to hear disputes among natives on native customary laws.

Native - person who is of an indigenous race. Native Courts have no jurisdiction in respect

of matters within jurisdiction of Syariah Courts or Civil Courts

Native Court (Sabah and Sarawak only) has original jurisdiction over the following cases;(a) breach of native law or custom where all

parties are natives; or(b) breach of native law or custom on religion,

matrimony or sex where one party is native; (c) involving native law, custom relating to;(i) betrothal, marriage, divorce, nullity of marriage

and judicial separation;(ii) adoption, guardianship or custody of infants,

maintenance of dependants and legitimacy;(iii) gifts or succession testate or intestate

Courts are a means/forum for settling disputes. But it could be expensive, time-consuming, too formal etc. Tribunals are set-up under statutes to provide expertise, speed and is cheaper form of dispute resolution.

independent body established under s. 85, Part XII of Consumer Protection Act 1999.

Operates under Ministry of Domestic Trade, Co-operatives and Consumerism.

Primary objective - provide alternative forum for consumers to file claims in a simple, inexpensive and speedy manner.

consumer can lodge claim with Tribunal for any loss suffered arising from

- false or misleading conduct, false representation or unfair practice, as to the type, manufacturing process, suitability for purpose, quality and quantity, as to price of goods or services, offer of gift, prize or other free item with intention of not providing it e.g. misleading claims such as

1) while stocks last; 2) goods are limited, etc.

- receiving payment without intention to supply goods or services;

- Safety of goods and services

Established on 1st December 2002 by Ministry of Housing and Local Government Housing Developers (Control and Licensing) (Amendment) Act 2002

To provide channel or alternative facility for homebuyers to claim for compensation from housing developer easily.

Under the National Registration Department.

S 106 Law Reform (Marriage and Divorce) Act 1976.

For reconciliation.

Must have Tribunal’s certificate in order to get court order for divorce.

Alternative dispute resolution. Alternative to courts.

less expensive but carries weight of court ruling. confidential. flexibility in crafting solutions within realm of

legality. helps mend and build relationships and trust

esp. in family disputes. mediation is about dialogue not arguments.

may have 1 or 2 mediators assisting parties to facilitate agreement.

Mediator doesn’t make decisions for parties, just help them reach agreement.

Mediator could be expert in that area.any type of dispute can be mediated e.g.

labor, property. Exceptions - child abuse or neglect, domestic violence, criminal offences.

established in 1999, by Bar Council. Objective - promoting mediation as means of alternative dispute resolution and provide proper avenue for successful dispute resolutions.

Set up by Bank Negara Malaysia in 2005. provides faster, convenient, efficient, independent

and impartial avenue for dispute resolution as alternative to courts.

Disputes may be bet. insurers & policyholders, consumers & financial institutions

independence of Mediator guaranteed by council of Bureau

membership - representatives of public & consumer interests & representatives of members of Bureau.

Mediator can investigate and decide on complaint, dispute or claim between Insured and Insurer.

form of dispute resolution (ADR). Its the private, judicial determination of a

dispute, by an independent third party. begins with parties agreeing that disputes

between them will be resolved by arbitration. S. 36 Malaysian Arbitration Act 2005 - award

by arbitral tribunal is final and binding, unless it conflicts with public policy e.g. fraud, corruption or breach of rules of natural justice. Should party fail to honour award, other party may seek relief from crts.

Governing Law - Arbitration Act 2005. In M’sia, arbitration is facilitated by Kuala Lumpur

Regional Centre of Arbitration set up in 1978. KLRCA is a non-profit organisation and not branch or agency of government.

Awards of KLRCA are enforceable in countries which are signatories to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

The Arbitration Tribunal - Arbitration Act 2005 - in the event parties silent on number of arbitrators, tribunal shall consist of 1 arbitrator and for international arbitration 3 arbitrators.

cost-effective Choice of arbitrator Efficient Privacy Convenience Flexibility Finality Enforcement

Consumers & employees not aware they have been forced into arbitration;

Cost - can be burdensome; arbitrator can be bias; Decision final and binding. No right to

appeal; Delay - when there are multiple

arbitrators; Powers of Arbitrators limited

Art. 5 of Federal Constitution - Islamic law is a state matter.

parallel system of state Syariah Courts -jurisdiction over matters of state Islamic law.

jurisdiction over matters involving Muslims only.

no jurisdiction to enforce Federal Laws. Those who do not profess the Islamic faith

and Muslims whose disputes do not fall within the purview of the Syariah Courts are subject to secular legal system.