The Economic Effect of Judicial Decisions

A consideration of the economic consequences of poor, corrupt or biased judicial decision making after considering a brief example of such a decision, the oath of a judge as found in Schedule Six of the Federal Constitution by one Mr. Fahri Azzat.

As it stands, the Federal Court still owes not just the litigants but the general public (particularly Perak) its reasoned (hopefully) considered (fingers crossed) written judgment for its decisions in the Sivakumar case which fly in the face of Article 72(1) of the Federal Constitution which simply provides:

The validity of any proceedings in the Legislative Assembly of any State shall not be questioned in any court.

I think that even if you aggregated all the judges in the judiciary (hell, throw in the entire Commonwealth as well), you could not reasonably justify such a decision. And should they even been doing that? Well, not according to their very own oaths, which can be found in the paragraph 1, of the Sixth Schedule of the Constitution which is as follows:

“1. Oath of Office and Allegiance

“I, …, having been elected (or appointed) to the office of …. do solemnly swear (or affirm) that I will faithfully discharge the duties of that office to the best of my ability, that I will bear true faith and allegiance to Malaysia, and will preserve, protect and defend its Constitution.”

“(NOTE – A judge of the Federal Court, other than the Chief Justice, a judge of the Court of Appeal or of a High Court or a judicial commissioner shall use the words “my judicial duties in that office” in place of the words “the duties of that office”.)”

It said nothing about ignoring it for any reason whatsoever. It said ‘preserve, protect and defend’ the Constitution. It did not say ‘to do Justice between the organs of State’ or something to the like effect. It’s duty is first to the Constitution and by that is meant obeying its clear wording. But it is clear that they have failed because they have ignored it. NH Chan makes that patently clear in his excellent article at comment 7 above. There may be little rhyme but there is plenty of reason unlike what is going on with the appellate courts recently.

What I wish to dwell about here today is about the economic effect of poor judicial decision making. I have outlined that above very briefly already (NH Chan’s pieces contain a more fuller appreciation of the issues and I heartily recommend you read them) why I think so. Other examples that readily came to mind would be the Federal Court Ayer Molek Decision back in the 1990’s and the 2001 decision of Boonsom Boonyanit decision.

When the Judiciary makes their decisions, they do not do so just for the litigants or the lawyers. The relevant community watches, anticipates and waits for developments of the law which are of interest to them. But not only them but also ambassadors of many foreign nations, i.e. the world. It is undoubted that in their dossier on our country would include the quality of the law and the reliability of their institutions to their country. The US has a Financial Climate report on many countries which it prepares for public dissemination but which are of interest mainly to American business that seek to invest in other countries. It includes a section on just those aspects.

One does not need an ounce of financial acumen to realize that poor or biased or corrupt judicial decision making is bad for business. And that a poor court decision can also prove costly for everybody else. Corruption breeds uncertainty, higher costs of transactions (all offers made has to factor in the price of the corruption), inefficiency and a mean edge to everything. Businesses as everyone knows demand stability and certainty of the law and its courts. And foreigners and foreign countries demand an even higher level of certainty than that of its citizens because that is not its natural environment. Citizens will be a little more tolerant because that is their home.

Both the Executive and in some respects the influential part of the Judiciary fail to appreciate that an impartial, efficient, transparent, honest Judiciary is not just every citizen’s Constitutional right but can generate positive economic development as well. The English Judiciary, because of its generally high repute, often finds itself being appointed as the venue for dispute resolution by foreign parties who may not even be doing their business there. So international litigants go to London to have their cases adjudicated or arbitrated because the courts and the practitioners are there. This means employment for the legal profession, and spin offs for the hotels, banks, food businesses, for example. From this it can be drawn that foreign businesses are willing and able to pay for a good justice system to adjudicate their dispute. That should be our Judiciary’s benchmark – that it be renowned for its wisdom, patience, incorruptibility, diligence and honesty that foreign businesses feel safe and confident enough to request that our judiciary or arbitrators resolve their dispute. There is great honour in being asked to resolve a dispute – it shows that the parties have immense faith in your abilities to decide their dispute impartially and fairly, and is an indication of just how highly they think you are.

And since the Executive has a firm hold on the Judiciary, this also indicates that it too has a part to play in this sorry debacle. It can liberalize the markets, give this or that tax incentives, and all these financial incentives. And the Legislature can come up with the most fantastic laws on the planet. But few will come if the Judiciary doesn’t work the way it should. What’s the point if I don’t trust the dispute resolution process here? Why should I come here if I don’t think the judge is going to judge my case fairly? Or why should I have to deal with the stress of whether the other party has bought my case over? If I’m a foreign business, I’ll take my business elsewhere. Why? Because its cheaper to be able to do it all at one place – business and dispute resolution. That’s the other thing about businesses – it’s all about reducing its costs. If we are too corrupt and greedy to become reasonable for their costs, they will take their business elsewhere. Our government should be asking why the Arabs have the bulk of their money parked in Europe or America or their own banks instead of here, an OIC member? So much for Muslim country solidarity over business interests.

Like the Singapore government for example, which say whatever you like about them, they got the mix right – intelligence matched with political compliance or ignorance. They are where a good deal of the juicy big arbitration cases are happening. All they have aside from their tourist and manufacturing is their service industry, which includes the financial, legal, etc., i.e. mostly their intellectual capital. We have a great deal more and yet we appear to have so much less than them in many respects – quality of education, of civic and public institutions (their libraries are fantastic and highly accessible with satellites are popular areas), generally not corrupt and efficient government, well thought out planning for their public works, strict enforcement of the law, for example. And if you intend to ask why I’m praising Singapore and have not migrated over is because I love my country, massive gaping, gushing warts and all, and its too stifling and there’s not much of a sense of a soul there)

Though I understand why corruption can never be completely eradicated, I sometimes wish those who indulge in it could perhaps in their weaker moments, at the very least, be less greedy – don’t take so much as to cause hardship on the one stolen or received from – and to be a touch more diligent in attending to their duties instead of their extra future financial sources or indulging in their new found wealth.

Even though it is scraping the bottom of the barrel, surely, this is the very least the citizen could hope to expect?

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Fahri Azzat practices the dark arts of the law. Although he enjoys writing and reading, he doesn't enjoy writing his own little biographies of himself. Like this one. He wished somebody else would do it for him. He has little taste in writing about himself in third person. He feels weird doing it. But the part he finds most tedious is having to pad up the lack of his accomplishments, or share some interesting facts about his rather uneventful life, as if there were some who found that oh-so-interesting; as if he were some famous person, like Michael Jackson. When he writes these biographies, the thought, 'Wei, Jangan Perasaan- ah!' lights up in his head. So he usually just lists what he got involved with, positions he held and blah, blah. But this time. Right here. Right this very moment. Uhuh. This one. This one right here. He's finally telling it like it is.

Posted on 25 May 2009. You can follow any responses to this entry through the RSS 2.0.

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3 Responses to The Economic Effect of Judicial Decisions

  1. Pingback: The Damning Lack of Dissent | LoyarBurok

  2. No problem in this Bohonland. All the elite Mr Spinners are feeding the public with overcooked rethorics and lies, even political prostitutes will be embarassed…but, not to these Ketuanan UMNO Melayu together with their appointed 'dignified judges'!

    Live with it, we have kagaroo courts in full operation!

    or, shall we call it, "Operation Pig A#ses"

  3. didi

    Why do you think corporations setup regional headquarter companies in Singapore. The cost of operation is higher. But the legal system is of high quality and free of corruption.

    Would I set up the regional HQ company in Malaysia. No way.