The decision or judgement of a judge may fall into two parts: the ratio decidendi (reason for the decision) and obiter dictum (something said by the way).
RATIO DECIDENDI - The ratio decidendi of a case is the principle of law on which a decision is based. When a judge delivers judgement in a case he outlines the facts which he finds have been proved on the evidence. Then he applies the law to those facts and arrives at a decision, for which he gives the reason (ratio decidendi).
OBITER DICTUM - The judge may go on to speculate about what his decision would or might have been if the facts of the case had been different. This is an obiter dictum.
The binding part of a judicial decision is the ratio decidendi. An obiter dictum is not binding in later cases because it was not strictly relevant to the matter in issue in the original case. However, an obiter dictum may be of persuasive (as opposed to binding) authority in later cases.
THE COURT HIERARCHY
THE EUROPEAN COURT OF JUSTICE
Under s3(1) of the European Communities Act 1972, decisions of the ECJ are binding, in matters of Community law, on all courts up to and including the House of Lords.
THE HOUSE OF LORDS
This is the highest court in the land unless a matter of EC law is involved.
The House of Lords was bound by its own previous decisions until 1966 when Lord Gardiner LC announced a change of practice. The Practice Statement  1 WLR 1234 stated that although the House of Lords would treat its decisions as normally binding it would depart from these when it appeared right to do so. This power has been used sparingly.
A decision of the House of Lords binds all lower courts.
COURT OF APPEAL (CIVIL DIVISION)
The Court of Appeal is bound by decisions of the House of Lords even if it considers them to be wrong.
In Young v Bristol Aeroplane Co Ltd  KB 718, the Court of Appeal held that it was bound by its own previous decisions subject to the following... [continues]
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