5. National (Bulgarian)
5.1. Court Dispute Resolution
The Bulgarian Judicial System and the hierarchy of Bulgarian courts include four types of judicial bodies: regional courts, district courts, courts of appeal, and topping the hierarchy are the two highest courts – the Supreme Court of Cassation and the Supreme Administrative Court.
The resolution of disputes by the courts is generally regulated by the Civil Procedure Code (“CPC”). According to the CPC Bulgarian courts are exclusively competent to consider all civil cases including investment disputes.
Bulgarian courts are competent to administer justice against all persons (individuals and legal entities) in Bulgaria except in cases of extraterritoriality.
Since 1st January 2007 when Bulgaria became a Member to the European Union the relevant EU laws are applicable in Bulgaria including Council Regulation (EC) No.44/ 2001 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters. In case Bulgarian courts will be competent to resolve an investment dispute under the rules of the Regulation, the provisions of CPC will be applied for the court proceedings.
The CPC introduces special claim proceeding applicable for resolving of commercial disputes. The legal definition of “commercial dispute” in the CPC is very broad and it includes in its content as follows:
1. a commercial transaction disputes, as well as for filling gaps in a commercial transaction or adjustment of any such transaction to intervening circumstances;
2. a privatization contract, a public procurement contract, or a concession contract;
3. participation in a commercial company, as well as for establishment of admissibility or nullity of a recording and for non-existence of a circumstance recorded in the commercial register;
4. replenishment of the bankruptcy estate, including the actions of creditors for a declaratory judgment;
5. cartel agreements, decisions and concerted practices, concentration of economic activities, unfair competition, and abuse of a monopoly position or of a dominant position.
Court proceedings in front of Bulgarian courts may develop in three instance – first instance court, court of appeal (which may be the District Court or the Court of Appeal) and court of cassation (the Supreme Court of Cassation). The resolution of the second instance may be reviewed by the Supreme Court of Cassation in case the appealable interest exceeds BGN 5.000 (circa. EUR 2.500) in civil disputes or BGN 10.000 (circa. EUR 5.000) in commercial disputes and provided that the second instance court has pronounced on a issue of substantive law or procedural law:
1. which is addressed in conflict with the case law of the Supreme Court of Cassation;
2. on which there exist an inconsistent court practice;
3. is relevant to the correct application of the law, as well as to the progress of the law and jurisprudence.
The Bulgarian Private International Law Code (“PILC”) provides for specific rules applicable to the recognition and enforcement of foreign judgments, but in case the foreign judgment is issued by a court of a EU Member State the provisions of Council Regulation (EC) No.44/ 2001 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters will be applicable. Both legal instruments have similar provisions.
According to the PILC the judgments of foreign courts shall be recognized by the authority whereto the said judgment is presented. Should the conditions of recognition of the foreign judgment be raised as the issue in a dispute, an action for ascertainment may be brought before the Sofia City Court. This court is competent to hear cases for enforcement of foreign judgments as well.
In proceedings for recognition and for enforcement of foreign judgments the court shall not examine the merits of the dispute decided by the foreign court. It will only verify the conditions covered as defined by the PILC.
5.2. Alternative Dispute Resolutions
Being faster and less expensive compared to the court proceedings, arbitration is the most popular alternative dispute resolution in Bulgaria. Arbitration proceedings in Bulgaria are governed by the International Commercial Arbitration Act (“ICAA”), the relevant international treaties to which Bulgaria is a party and rules of the respective arbitration institution, if relevant.
ICCA applies to international arbitration based on an arbitration agreement, when the place of arbitration is within the territory of the Republic of Bulgaria and one of the parties under the dispute has its habitual residence, registered office according to its Deed of Incorporation or place of the actual management outside Republic of Bulgaria. ICCA also applies to domestic arbitration when neither party to the proceedings is a foreign person/entity. The arbitration is competent to settle civil and/or commercial disputes, as well as disputes related to the filling gaps in contracts or their adaptation to newly arisen circumstances. The CPC explicitly excludes from the competence of the arbitration the disputes having as their subject matter any real rights or possession over a real estate, alimony or a right under a labor relation.
There are more than a dozen arbitration institutions in Bulgaria at the moment such as the Marine Court of Arbitration at the Bulgarian Marine Chamber, Sofia Court of Arbitration at the Association for Internal and International Arbitration, Court for Small Civil Disputes at the Bulgarian Association for Civil Society and Legal Initiatives, etc. The most famous and reputable among them are the Court of Arbitration at the Bulgarian Chamber of Commerce and Industry (http://www.bcci.bg/arbitration/index.html) and the Arbitration Court at the Bulgarian Industrial Association (http://www.bia-bg.com/arbitration/).
The fees attributable to the arbitration institutions in Bulgaria differ from one another and are specified in their respective Tariffs and Rules on Arbitration. In principle the fees are formed on the basis of the value of the claim as they increase in proportion to it.
The state fee for the enforcement of an arbitration award issued by an arbitration court in Bulgaria is 0.2% on the interest for which the enforcement is requested.
With regard to the recognition and enforcement of foreign arbitration awards the ICCA refers to the international agreements to which Bulgaria is a party. In view of the above mentioned such awards shall be recognized and enforced in compliance with the provisions of the New York Convention for Recognition and Enforcement of Foreign Arbitration Awards (the “Convention”) to the extent it is not conflicting to the bilateral agreements concluded by Bulgaria which provide for specific rules for recognition and enforcement of foreign arbitration awards. Unless otherwise provided in an international convention to which Bulgaria is a party the competent court is the Sofia City Court.
Sofia City Court may in some specific cases refuse the recognition and enforcement of the award, f. ex. where there was no valid arbitration agreement or in case of breach of the procedural rules or the provisions of the arbitration agreement as well as when the recognition or enforcement of the award would be contrary to the public order in Bulgaria.
The fee collected by the Sofia City Court for the recognition and enforcement of foreign arbitration awards is fixed to BGN 50 (appr. EUR 25)