M Manoharan and P Uthayakumar were detained in December 2007 after they organised a rally of more than 5,000 people in Kuala Lumpur to protest what they said was the Malay-dominated government's discrimination against minority ethnic Indians.
The two leaders of the now-banned Hindu Rights Action Force were arrested under the Internal Security Act and accused of being a threat to national security by fanning racial hatred.
Manoharan and Uthayakumar, who were released in May last year, named six defendants in their suit, including Prime Minister Najib Razak and former premier Abdullah Ahmad Badawi.
The act, drafted more than 50 years ago to battle a communist insurgency, allows the government to detain an individual for up to two years without trial. Detention terms may also be extended indefinitely.
In June, the High Court awarded former Internal Security Act detainee Badrul Zaman Mohamed 3.3 million ringgit in damages after finding the government guilty of wrongfully detaining the businessman on allegations of issuing fake documents to foreigners.
Muslim Malays account for 60 percent of Malaysia's 28 million people while ethnic Chinese and Indians, who are mostly non-Muslims, make up a third. Ethnic Indians form the bottom rung of Malaysia's social ladder and make up the majority of the country's poor, prompting Manoharan and Uthayakumar to claim the government has failed to aid the community.
Malaysia prides itself on the relative harmony among its multi-ethnic society, but there has been growing public frustrations in recent years over claims that the mainly Malay government has sidelined ethnic minorities.