Courts interpret statutes and regulations. Generally there are two types of courts: trial courts and appeals courts.
Trial courts determine matters of fact and determine the application of the laws to a given set of facts.
Appeals courts determine whether the statutes and regulations have been applied fairly and correctly in trial courts or a lower appeals court.
The opinions rendered by appeals court decisions constitute the body of case law. Case law evolves as the courts interpret laws and regulations. Courts must follow precedent, which means that a lower court must follow the decision of the higher appeals court. This principle is called stare decisis.