In a dispute between two parties, the court must first establish what happened. The facts are usually determined by the trial judge. Although in some countries jury may be used, in Malaysia, it was abolished in the 1980s. Once the facts are determined, the judge will then make the application of law to the facts to determine which party would succeed. The doctrine of judicial precedent is important because it is the ratio decidendi of a previously decided similar case, decided by a higher court to the current facts that will decide the solution of the case.
1 JUDICIAL PRECEDENT
The weight or authority of rules of law derived from cases may vary. These relative weights are determined by the doctrine of precedent. Nearly all legal systems (including civil law systems) have some form of a doctrine of precedent, though its provisions may vary. Even a legal system which explicitly prohibits the citation of earlier cases in court could be said to have a doctrine of precedent in that it has a rule which regulates the use of precedents.
Countries which derive their legal systems from the English common law are said to employ the doctrine of stare decisis. They are regarded by many as having a strict rule of precedent, although there is a substantial body of opinion that, in fact, the rule is not applied as strictly as the theory indicates.
The general rules of the doctrine of precedent in common law systems can be summarised as shown in the following Figure 6.1:
Figure 6.1: The general rules of doctrine of precedent
The general rules of doctrine of precedent will be further elaborated as follows.
(a)Each Court is Bound by Decisions of Courts Higher in its Hierarchy
(b)A Decision of a Court in a Different Hierarchy may be of Considerable Weight but Will Not be Binding
In the case of Director General of Inland Revenue v Kulim Rubber Plantations  1 MLJ 214, the judge in this case referred to the decisions of the courts in Australia, England and New Zealand and stated:
(i)Only the ratio decidendi (the judge’s decision on the material facts) of a case is binding
See the case of Carlill v Carbolic Smokeball Co (discussed under ratio decidendi).
(c)Any Relevant Decisions, Although not Binding, may be Considered and Followed The rule in the English case of Young v Bristol Aeroplane Co Ltd was followed by the Federal Court. The practice of following this rule can be traced back to the Court of Appeal case of Hendry v De Cruz (1949) 15 MLJ Supp 25. In this case the court was faced with the question as to whether it was bound to follow the previous decision in Butter Madden v Krishnasamy (unreported). To answer the question the court stated:
The question whether the Court of Appeal in England should be bound to follow its own decisions remained in doubt until 1944 and was then settled by the case of Young v Bristol Aeroplane Company Limited:
(d) Precedents are not Necessarily Abrogated by Lapse of Time The present Federal Court is the successor of the Supreme Court and as such bound by decisions of the latter.
The courts at the top of the hierarchy normally treat decisions of lower, but still superior, courts within the hierarchy as highly persuasive. Decisions of superior courts within a different hierarchy, while not binding, may also be considered highly persuasive. For example the Federal Court in the case of Malaysia National Insurance v Lim Tiok  2 MLJ 165 adopted the criteria laid down by the House of Lords in Food Corporation of India v Antclizo Shipping Corporation  2 All ER 513.
In addition, the doctrine means that appellate courts are either bound by their own decisions or will depart from them only with reluctance. For example in the case of...