Bulgaria: Key Amendments To Bulgarian Arbitration Law

The Bulgarian Parliament has recently adopted important amendments of the Law on International Commercial Arbitration (the "LICA") and of the Civil Procedure Code (the "CPC"), concerning fundamental arbitration issues such as the scope of non-arbitrable disputes, the grounds for setting aside domestic arbitral awards as well as the criteria for establishing tacit prorogation of arbitral jurisdiction. The 2017 amendment of the Bulgarian arbitration laws also saw the introduction of previously not existing minimum professional requirements for arbitrators and the establishment of a special state body responsible for exercising limited supervisory functions with respect to arbitrators and arbitration institutions.

The amendments discussed were promulgated on 24th January 2017 in State Gazette issue No. 8 and constitute part of the effective Bulgarian legislation as from 28th January 2017.

1. Expanding the Scope of Non-arbitrable Disputes

By virtue of the 2017 CPC amendment disputes in which one of the parties has the quality of a consumer were included in the list of non-arbitrable disputes. According to the Bulgarian Consumer Protection Act, a 'consumer' is any natural person who acquires products or uses services for purposes that do not fall within the sphere of his or her commercial or professional activity, and any natural person who, as a party to a contract under the Consumer Protection Act, acts outside his or her commercial or professional capacity. The fact that consumer disputes are not arbitrable means that an arbitration clause or agreement concluded with respect to a consumer dispute is null and void.

Since the amendment in question was introduced with view to combating existing malpractices in arbitrations against consumers based on an arbitration clause contained in general terms, the Transitional Provisions of the law introducing the said amendment to the CPC provide that all arbitration proceedings with respect to non-arbitrable disputes pending at the time the discussed amendment entered into force shall be terminated.

2. Amended Grounds for Setting Aside Arbitral Awards

(i) Non-arbitrability

Prior to the 2017 amendment of the LICA, Article 47 thereof provided that non-arbitrability of the dispute is grounds for challenging the arbitral award rendered with respect to such a dispute. Under Article 19 of the CPC disputes involving rights in rem in and possession of real estate assets, alimony, rights arising out of employment relationships as well as disputes in which one of the participating parties is a 'consumer' are not arbitrable.

The 2017 LICA amendment provides that the arbitral awards rendered with respect to non-arbitrable disputes are null and void. Thus, while prior to the discussed amendment arbitral awards rendered on non-arbitrable disputes were valid, but could be challenged by the interested party before the Supreme Court of Cassation, currently, by virtue of the 2017 amendment of the LICA, the interested party may rely directly on the nullity of the arbitral award delivered with respect to a non-arbitrable dispute without undergoing the process of challenging the award. In order to further protect the rights of the party affected, the CPC amendment provides that courts shall not issue a writ of execution requested on the basis of an arbitral award rendered with respect to a non-arbitrable dispute.

(ii) Public Policy

Incompliance with public policy became grounds for setting aside a domestic arbitral with amendment of the LICA in 2001. By virtue of the 2017 amendment of the LICA, however, public policy is no longer grounds for challenging a domestic arbitral award. The motives behind the replacement of "incompliance with public policy" as grounds for setting aside an arbitral award are unclear. Breaches of due process, for example, were most common grounds for challenging arbitral awards under the qualification of "incompliance with public policy".

The amendment discussed creates dualistic treatment of domestic and international arbitral. This is because public policy remains, by virtue of the provisions of the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards grounds for refusing recognition of international arbitral awards.

3. Tacit Prorogation

According to Article 7, para 3 of the LICA, as drafted prior to the 2017 amendment, an arbitration agreement is considered concluded when the defendant takes part in the arbitration proceedings without questioning the jurisdiction of the arbitration. This gave rise to disputes and inconsistent case law as to what qualifies to taking part in arbitration proceedings sufficient to establish an arbitration competence and in particular - is it necessary for the party to take active steps to participate in the proceedings, or it is enough that the party was duly notified for the initiated arbitration procedure and did not contest the tribunal's jurisdiction. The recent 2017 amendment of the LICA introduced that filing written objections, submitting evidence, filing a counterclaim, or attending the arbitral hearing without challenging the competence of the arbitration tribunal is the participation that qualifies for establishing jurisdiction in favour of the arbitration tribunal. Thus, the mere failure of the respondent to object to the jurisdiction of the arbitration tribunal when such respondent was duly notified about the arbitration proceedings is not sufficient to confer jurisdiction to the arbitration tribunal.

4. Requirements for Arbitrators

The 2017 LICA amendment introduced for the first-time statutory requirements for being an arbitrator. Pursuant to Article 11 (3) of the LICA only a person of legal capacity and full age, who has not been sentenced for an intentional criminal offence, has at least eight years of professional experience, and possesses high moral qualities is eligible to act and be appointed as arbitrator. The professional qualification of the arbitrator is one of the grounds for challenge of the arbitrator's appointment.

5. Administrative Sanctions

Following the 2017 amendment of the LICA all arbitrators and arbitration institutions operating in Bulgaria are now subject to supervision by an Inspectorate with the Bulgarian Ministry of Justice. The introduction of such supervision seems to be rather controversial in so far as it allows for the Minister of Justice to issue mandatory prescriptions to the arbitrators and the arbitration institutions and to impose fines for non-compliance with these prescriptions. Since the scope of the said prescriptions remains unclear, it seems that the introduction of a possibility that an executive body would give prescriptions to arbitrators and would sanction them for non-compliance with these prescriptions, interferes with the concept for independence of the arbitrators, viewed not only as requirement for lack of ties between the arbitrator and any of the parties to the dispute, but also as functional independence of the arbitrator from executive state authorities.

Originally published by Vol 22 No 1 of IBA's Arbitration Newsletter.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions