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Ratio decidendi and
obiter dictum
So far as the parties to any particular case are concerned,
all that matters is the judge’s decision; he gives judgment
either for the plaintiff or for the defendant and that, subject
to any right of appeal which may exist, is an end of the matter.
In delivering judgment, however, the judge gives reasons for
his decisions, and it is these reasons which may be important
as precedents in future cases. No two cases which come before
the courts are exactly alike, and to discover whether there
is a binding precedent it is necessary to establish the ratio
decidendi, that is, the exact reason or reasons for the decision.
It is the ratio decidendi alone which is binding for the future.
There are various views as to the precise meaning of the phrase
ratio decidendi, but it is enough to say that it means the legal
principal on which the decision rests. Any statement made by
the judge which is not essential to his decision is not part
of the ratio decidendi and therefore not binding for the future.
It is known as obiter dictum, which may or may not have persuasive
influence in future cases.
A good example of both ratio decidendi and obiter dictum is
to be found in the judgment in the most famous of all insurance
law cases, Castellain v. Preston (1883) which was concerned
with the principle of indemnity in relation to a policy of fire
insurance. A passage from the judgment reads:
The very foundation, in my opinion, of every rule which has
been applied to insurance law is this, namely, that the contract
of insurance contained in a marine or fire policy is a contract
of indemnity, and of indemnity only, and that this contract
means that the insured, in case of a loss against which the
policy has been made, shall be fully indemnified, but shall
never be more than fully indemnified.
The only principle which this case laid down was that a policy
of fire insurance is a policy of indemnity. That was all that
was in issue, and the words ‘a marine or’ were obiter
dicta. In fact the reference to marine insurance in this particular
case would not have to be relied upon even as a persuasive precedent
in future cases relating to marine insurance, as the proposition
that a policy of marine insurance is a policy of indemnity was
settled law well before Castellain. On the other hand, it is
a persuasive precedent so far as newer classes of property insurance,
such as theft, are concerned.
In cases heard in the House of Lords in the Court of Appeal,
there may be more that one ration decidendi given. For example,
three judges of the Court of Appeal may come to the same result,
that is, they may all be agreed that the appeal should be allowed
or dismissed, but each judge may give different reasons. This
is even more likely to happen in the House of Lords, where there
are usually five judges. In such circumstances, it cannot be
said that any particular precedent has been created, and the
law thus remains in a state of uncertainty.
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