His case drew a chorus of international criticism with then-U.S. Vice President Al Gore saying at the time that the trial "mocked international standards of justice."
Although Malaysia's top court ultimately overturned the conviction, doubts remain as to whether the 62-year-old Anwar, who represents the biggest political threat to the government that has run Malaysia for 52 years, will get a fair trial.
This time, he is charged with sodomising a male aide in a trial that has been dubbed "Sodomy 2" by the Malaysian media.
"For political cases, the public has grave concerns about the independence of the judiciary," said Lim Chee Wee, vice president of the Bar Council of Malaysia. "There is also the upcoming Anwar 'Sodomy 2' trial where the presently available evidence suggests selective prosecution."
Malaysia's government has a long history of curbing the power of the judiciary, starting in 1988 when Mahathir sacked the country's top judge amid a political row that could have seen the man who became the country's longest serving premier removed.
The Anwar trials further undermined trust in the courts and public confidence in the judiciary ebbed further after a judicial appointments fixing scandal in 2007, prompting the government to initiate a judicial reform effort.
Court rulings against the government in recent months have provided a glimmer of hope the judiciary has not been completely emasculated. One on December 31 supported the rights of Christians to use the word "Allah" for God.
But with the National Front government battling to reassert its control over this Southeast Asian country, Anwar's trial may be too politically sensitive for a fair hearing, said Zaid Ibrahim, a former law minister who was tasked with judicial reform but who quit the government in 2008.
"Well, I don't think much has changed (since Anwar's last trial)," said Zaid, now a member of the opposition. "When we talk about judicial independence we are talking about politically sensitive cases involving ministers and the government."
The government has denied any interference and has promised that Anwar would receive a fair trial.
NO LEADERSHIP CHALLENGE
Mahathir's attack on the judiciary in the 1980s came after he narrowly survived a challenge to his leadership. While there is no leadership challenge to current Prime Minister Najib Razak, he is struggling to rebuild confidence in his own political party.
Najib's United Malays National Organization, and the 13-party National Front coalition that it leads conceded control of five states and lost its two-thirds parliamentary majority in national and state elections in 2008, their worst ever showing.
Voters, upset over rising corruption, failed reform pledges and increasing complaints of minority marginalization, have since handed the opposition victories in seven out of nine by-elections held since the national polls.
Promises by Najib to end corruption and to rebuild the multi- ethnic nature of the ruling coalition that relied in the past on support from ethnic Chinese and Indian voters have been damaged by a multi-billion dollar graft scandal at a port and by attacks on churches over the "Allah" row.
Data from the World Economic Forum's Global Competitiveness Report show Malaysia's judicial independence global rankings fell to 53rd place in 2009 from 47th place in 2008.
Its scores are well below regional leaders Hong Kong and Singapore which ranked 14th and 19th respectively, undermining Najib's bid to woo new foreign investment to help diversify the country's export-dependent economy.
Foreign bondholders in the scandal-plagued Port Klang Free Zone have sought a government guarantee for the bonds, fearing a Malaysian court could invalidate their claims due to the issue of fake guarantees for the bonds.
Malaysia has made some progress in cleaning up its commercial courts, dogged by complaints of delays and inefficiency, said the Bar Council's Lim, who noted that trial disposal rates had shot up to 597 in 2009 from 87 in 2008.
Efforts to reduce trial times drew praise from Malaysian International Chamber of Commerce and Industry Executive President Stewart Forbes whose body represents 1,000 members with over 110 billion ringgit ($32.23 billion) of investments here.
"Certainly, it's fair to say that over the last 18 to 24 months, there has been a marked improvement in that aspect of the judiciary," he said.
However, businesses remain concerned by poor perceptions of the overall quality of the judiciary.
"It may not simply be because one or other particular case, but unfortunately at the moment and over the last few years in Malaysia, the judiciary has been pulled into a large number of elements of debate vis-a-vis a whole range of court cases and issues," Forbes noted.
ALLAH CASE HAILED
As well as the improved trial times for commercial cases, some lower courts have recently exercised their independence and ruled against the government in politically sensitive cases.
The recent ruling on the "Allah" case that allowed a Catholic newspaper to use the word in its Malay language editions has been hailed by critics, including Anwar, as a sign of judicial independence.
The Kuala Lumpur High Court recently reversed a ban on a book of essays on Islam and women's rights which the government contended contradicted official teachings on Islam and in May last year, it ruled a government takeover of the opposition-ruled north eastern state of Perak was illegal.
Critics say such rulings are rare and at times get overturned by the higher courts, as was the case in the Perak verdict which is now before the country's highest court, the Federal Court.
"At the lower level courts, there are independent minded judges but at the higher level courts, we'll have to wait and see because there are lots of issues still not resolved," said Zaid, the former law minister.