Judicial precedent is the process by which judges follow the decisions in previous cases where the case facts are sufficiently similar. The main basis for this doctrine is the application of the legal principle Stare Decisis (Elliot and Quinn 2009). Translated this means let the decision stand, the practical application of this means the inferior courts are bound by the decisions of all courts above them in the judicial hierarchy. The principle of Stare Decisis working within the judicial hierarchy allows for consistency and predictability in the law.
It was once considered that following this principle that Judges were merely declaring the existing law. This viewpoint was referred to as ...view middle of the document...
The law is then applied to the case facts and a decision is reached. How this decision is reached is recorded as the Ratio Decidendi.
Obiter Dicta literally means things said by the way. This allows the judge to speculate what would have happened if certain facts of the case were different and what the outcome of the trail could have been.
It is the Ratio Decidendi that is the binding part of the decision reached by a judge. The Obiter Dicta is not binding as it is not entirely relevant to the issues in the original case. However the Obiter can be persuasive (instead of binding) authority in a later case.
A difficulty that arises is that although the judge will give reasons for their decision, they will not always say what the Ratio is. It is then up to the judge in the next case where this precedent relates to define or “elicit” the Ratio of the case. This however can cause issues with what the original Ratio was or if there was more then one.
Binding precedent can be found in the Ratio of the case, this being the principle of law that based on the facts of the case can be applied to future cases.
The Ratio however is not the decision in the case. The decision is subjective and relates only to the specific correlation of facts, of each case therefore does not need to be followed in future cases. The decision is the judgement that is passed either declaring the defendant guilty or innocent. The decision in the case will be of vital importance to the parties involved but of little consequence to legal professionals in future cases.
The Ratio of a case and its effects can be seen most evidently in the case of Donoghue v Stephenson  A.C.562 (Ibbetson 1999). The Ratio of this case was proven to be highly influential upon the development of the law of torts. Although the case was dismissed at the House of Lords
This case shows how observations and anything that is included under the classification of Obiter Dicta can prove to be so influential that they are eventually elevated into a binding principle. In this case the ‘neighbour principle’ which establishes the duty of care in the tort of negligence for acts and omissions.
These Latin terms are the theoretical part of judicial precedent the practical application of these terms is based around the structure of the courts within the English Legal System, and the European courts.
Figure 1. The Court Structure in England and Wales (Her Majesty’s Court Service 2007)
As can be seen in the above diagram the structure of courts within England and Wales is a hierarchical system, with House of Lord heading up this system (until October 2009). Although ultimate power over the courts rests with the European Courts, under the s3(1) of the European Communities Act 1972 (Ingman 1987 and Hartley 2007), the decisions of the European Court of Justice and the European Court of Human Rights are binding on all courts up to and including the House of Lords (Supreme Court as of...