Kelantan challenge charts federalism path

From malaysiakini . . .

On Sept 10, 1963, the state government of Kelantan took the federal government and the first prime minister to court. This classic case came to be known as The Government of the State of Kelantan v The Government of the Federation of Malaya and Tunku Abdul Rahman Putra Al-Haj .

Kelantan was a party to the Federation of Malaya Agreement of 1957. Kelantan asserted that by convention, it must be consulted and its consent must be obtained to the 1963 Malaysia Agreement and the Malaysia Act. The Malaysia Agreement was signed by the prime minister, the deputy prime minister and four cabinet ministers on behalf of the Federation of Malaya.

The 1963 documents, according to Kelantan, would abolish the Federation of Malaya and amount to a breach of the Federation of Malaya Agreement 1957. In other words, the 1963 documents sought to end or alter the earlier agreement involving the 11 states of the Federation of Malaya.

The matter was heard on Sept 14 at 5pm less than 24 hours before Malaysia Day on Sept 16, 1963.

The High Court agreed that the new Federation is something different from the old one. It will contain three more states: Singapore, Sabah and Sarawak. It will have a different name.

The case was, however, decided on the issue whether Parliament or the Executive had trespassed in any way the limits placed upon their powers by the 1957 Merdeka Constitution. In the question of admission of new states, the Merdeka Constitution is silent as to the need to consult or obtain consent from the states and a simple majority in Parliament would suffice as was done in the present case.

The presiding judge, Chief Justice Thomson, did, however, envisage a situation where Parliament, although in complete compliance with the Constitution, may do something by way of an Act of Parliament that is “so fundamentally revolutionary” so as to require “a condition to which the Constitution itself does not prescribe, that is to say condition to the effect that the State of Kelantan or any other State be consulted”.

This observation was much criticised at that time. Sheridan ( Constitutional Problems of Malaysia , 1964), for instance, took the view that Thomson’s “additional criteria” will tend to increase the political and decrease the technical work of the courts and are unwelcome”.

However, a Constitution is no ordinary law. Constitutional theory can only be tested through the political practice of the government in power. Viewed in this light, the notion of politically neutral concepts of constitutional law is legal fiction and should be challenged.

Centre of power

The distribution of federal-state powers in the Constitution is tipped towards the centre and it continues to be circumscribed by the centre through laws passed by Parliament and policies of the federal executive. In some instances, a proclamation of Emergency ensures that powers are vested in the centre, thereby rendering the nation a unitary state in theory.

Given this preponderance towards the centre, it might be worthwhile to pursue the proposition that constitutional adjudication between the rights of states in relation to the centre should be premised on the fundamental guarantee of individual rights of states.

The style of constitutional adjudication thus far, however, show a preponderance towards the right of Parliament to make or unmake any law as long as the provisions on lawmaking set out in the Constitution is followed. Or in a rare case of upholding rights of states, Parliament may rule otherwise in an amendment to the Constitution.

Fiscal policy and resources (land, petroleum, tin, minerals and timber) are illustrative.

The federal government controls all important and indirect taxes. The transfer of funds from the centre to the state is available under certain formulae. The states have several resources of their own derived from natural resources.

In 1959, PAS won the state elections. It had no money to build a bridge on the Kelantan river, so Kelantan entered into an agreement with a mining company for its venture. The federal government took Kelantan to court alleging that she had contravened the Constitution on borrowing by States.

The matter went to the Federal Court in 1968 in the case of The Government of Malaysia v the Government of the State of Kelantan . The Federal Court ruled against the federal government and held that there was no relationship of lender and borrower to render the arrangement as “borrowing” under the Constitution. The pre-payment of royalties to Kelantan by the mining company concerned is a valid source of revenue and was not a loan.

However, Parliament had the last word and it amended the “borrowing” provision in the Constitution in 1971 (Act A31, Constitutional (Amendment No 2) Act 1971) to include “the payment before the due date of any royalties where the (State) has to repay or to refund.” A similar situation as in the 1968 case would most probably be construed as contrary to the Constitution under the 1971 amendment.

Federal-state problems

The recent spat between the state of Terengganu and Petronas, a corporation created under the Petroleum Development Act, 1974 reflects further lines of tension between the centre and the state.

The 1974 Act controls petroleum resources found in the States. All powers with regard to petroleum are vested by this Act in Petronas in return for cash payments to the federal and the state government as may be agreed between the parties concerned (s.4 of the Act).

The 1974 Act provides that Petronas is subject to the control and direction of the prime minister who may issue such direction to Petronas as he deems fit. Such direction shall be binding on Petronas notwithstanding any other written law to the contrary (s.2 and s.3 of the Act).

Public corporations and public authorities are becoming popular vehicles from which the centre may encroach upon state powers on its own resources. Public authorities play a major role in land matters in the federal-state set-up.

The federal government, for example, is empowered under the Constitution to order a state to grant land “needed for federal purposes” and “in the national interests” to the federation or “such public authority as the Federal Government may direct”. This power is in addition to land already reserved for federal purposes.

A public authority could be a federal or state body created by statute ( Merdeka University Berhad v Government of Malaysia ). State development corporations are thus construed as public authorities.

Any public authority is also a “state authority” for the purposes of the Land Acquisition Act ( Stamford Holdings Sdn Bhd v Kerajaan Negeri Johor ). This enables the public-state authority to acquire private land. Land acquired this way may be then transferred to the private sector by the public-state authority for various privatisation projects.

It is noted that federal-state problems occur in situations where the state government is different from the government at the centre, as can be seen from Kelantan and Terengganu under PAS, Penang under Gerakan (1969-1974 period) and Sabah under PBS. This further strengthens the view that politics loom large in these situations.

While labels may not hurt us, whether we are a federation with a central bias or a unitary state with federal features, what is more important is the manner in which competing interests are resolved.

In resolving competing federal and state interests, the institutions of government (Parliament, the Executive and the Judiciary) are charged or entrusted with the preservation of constitutional distinctions. The failure to do so would mean that these institutions had fail in their tasks and exceeded their authority. We would have failed our democracy.
SALBIAH AHMAD is a lawyer. Malaya! as a name for this column was inspired by meaning of “Malaya” in Tagalog which means freedom. The events at the end of 1998 in KL offer a new inspiration. Malaya! takes on the process of reclaiming the many facets of independence.

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