Commercial/civil law – procedural


How do courts in your jurisdiction resolve competing clauses in multiple contracts relating to a single transaction, lease, licence or concession, with respect to choice of forum, choice of law or mode of dispute resolution?

The court is entitled to rule on its own jurisdiction. Where the court finds that the case is not under its jurisdiction, it shall forward it to the competent court. In this event, the case shall be considered pending before the competent court from the day of submission of the claim.

The competence of the court is not precluded by an arbitration agreement, and the defendant must raise an objection that the dispute is subject to an arbitration agreement. Provided that the defendant does not object within the time frame for the submission of a reply to the statement of claim, the jurisdiction of the court is established and the arbitration agreement is deemed waived.

Choice of forum clauses is restricted by imperative rules of jurisdiction. The parties are entitled by a written agreement to refer a monetary dispute to a different local court only if the jurisdiction is not defined by an imperative provision of the law. (For example, disputes regarding rights in rem, are envisaged to be reviewed by the competent court at the place of the property and the jurisdiction cannot be altered by the parties.) In the case of a dispute with cross-border implications, in Regulation (EU) No. 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters applies.

The court settles the dispute in conformity with Bulgarian law. In the case of a dispute with cross-border implications in EU member states, Regulation (EC) No. 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I) applies. If the parties have not agreed upon the choice of applicable law, the general rule applies that the contract shall be governed by the law of the country where the party required to effect the characteristic performance of the contract has its residence.

Are stepped and split dispute clauses common? Are they enforceable under the law of your jurisdiction?

Stepped clauses are seen in practice, especially in multinational energy projects contracts (eg, for development of interconnection infrastructure), most commonly, envisaging first negotiation or mediation process, and if the latter fails, then the dispute is referred to arbitration or litigation.

Split clauses are not regulated under Bulgarian law and are not seen in practice, thus there is no court practice on the matter. The parties may, for example, choose certain aspects of their contractual relations to be disputed before court (eg, because they are non-arbitral, such disputes in respect of any rights in rem or possession of real estate) and others to be disputed before the arbitrational tribunal (eg, payment of contractual penalty). Strictly speaking, this is not a split clause that provides both the court and arbitration jurisdiction with a mechanism allowing one or both parties the right to determine the procedure once a dispute arises.

How is expert evidence used in your courts? What are the rules on engagement and use of experts?

Where special knowledge in the field of science is necessary to clarify and assess certain facts of the case, experts are appointed by the court at the request of the party or ex officio. The experts must be independent and impartial, thus not related to the parties, otherwise are subject to recusal. The court appoints only listed experts approved by a commission pursuant to article 401 of the Judicial Act or reputable academics by recommendation of a university or academic institution (eg, the Technical University in the city of Sofia).


What interim and emergency relief may a court in your jurisdiction grant for energy disputes?

There are no particular rules for interim and emergency relief in relation to energy disputes. The general rules in civil and administrative law proceedings apply.

Provided the dispute derives from private law relations, it is brought before the civil courts. The claimant might apply for interim measures at any stage of the proceedings or even before the proceedings were initiated. In this case, if the court grants the interim measures, a term for submission of the claim is set not later than one month from the interim measures. The applicant must provide in the interim measure proceedings that its claim is prima facie well-grounded and without the interim measures, it would be extremely difficult for the claimant to enforce its rights in the future. The claimant shall also prove that the requested measure is appropriate. The court is entitled to set a monetary guarantee, usually up to 10 per cent of the amount of the claim, to secure the damages that the defendant might suffer if the interim measure is not grounded. The types of interim measures in civil proceedings include interdict on a real estate, distrain on movable objects and receivables of the debtor, etc.

Provided that the dispute derives from public law relations, it is brought before the administrative courts. As a general rule, an appeal against an administrative act suspends its execution during the pending court proceedings. However, the Bulgarian legislator envisaged in the Energy Act that appeals against the decisions of the Bulgarian energy regulator do not suspend their execution. Interim relief can be requested by the addressee of the act before the administrative court to suspend the decisions for revocation of the licence, for imposing sanctions or for revoking the certificate of the independent transmission operator. The applicant must prove that the prior execution of the administrative act can cause significant damage or barely repairable damage to the addressee’s property, rights and obligations. The prerequisites for granting suspensions are very rigid and courts are reluctant to grant them.

What is the enforcement process for foreign judgments and foreign arbitral awards in energy disputes in your jurisdiction?

The general rules apply to the recognition and enforcement of foreign judgments and foreign arbitral awards rendered in energy disputes. For judgments rendered in civil and commercial proceedings in EU member states, Regulation (EU) No. 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters applies.

Foreign judgments rendered in states outside the EU are subject to recognition and enforcement pursuant to articles 118 to 122 of the Private International Law Code (PILC). The actions (claims) for recognition and enforcement of foreign judgment have to be brought before Sofia City Court. The cited provisions of the PILC provide that the statement of claim shall be accompanied by copy of the judgment, certified by the court that has imposed it. These documents should be certified by the Ministry of Foreign Affairs. The debtor may make objections of lapse of the obligation on the grounds of circumstances appearing after the foreign award has entered in force (eg, such as payment of the awarded sums).

Foreign arbitral awards are subject to recognition and enforcement under the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Arbitration Convention), implemented in the Bulgarian International Commercial Arbitration Act. The actions (claims) for recognition and enforcement of foreign arbitral awards have to be brought before Sofia City Court and articles 118 to 122 of the PILC shall apply, mutatis mutandis, to the hearing of such actions. Written proof that the award has been delivered to the debtor is also required according to article 51, paragraph 1 of the International Commercial Arbitration Act. The recognition and enforcement may be refused only on the grounds of article 5 of the New York Arbitration Convention. The court cannot retry the case on the merits. The court reviews the action on three instances. 

Alternative dispute resolution

Are there any arbitration institutions that specifically administer energy disputes in your jurisdiction?

No, there is no arbitration institution to review energy disputes. The most reputable arbitration institutions in Bulgaria are the Arbitration Court at the Bulgarian Chamber of Commerce and Industry (BCCI) and the Arbitration Court at the Bulgarian Industry Association, both of which review energy disputes when the parties have referred a dispute with an arbitration clause.

Is there any general preference for litigation over arbitration or vice versa in the energy sector in your jurisdiction?

In recent years, many arbitrational institutions were established to promptly review disputes regarding non-payment of due sums under-supply services contracts (in the telecommunications, energy and banking sectors). Owing to failure by the numerous arbitration institutions to conduct fair arbitrational procedures, the legislator specifically excluded consumer contract disputes from arbitration with amendments in 2017 to the Bulgarian Civil Procedure Code.

Owing to decreased trust in arbitration procedure, the usual referral of commercial energy disputes to arbitration tribunals has declined. Usually, companies in the energy sector used to incorporate the model arbitration clause of the Arbitration Court at the BCCI in all of their non-consumer contracts, but we are currently witnessing a withdrawal from arbitration and referrals to court.


Are statements made in settlement discussions (including mediation) confidential, discoverable or without prejudice?

The mediation proceedings led by qualified mediator are covered by confidentiality by law. Each of the participants is obliged to keep all facts and circumstances discussed during the mediation confidential. The mediator cannot be questioned as a witness.

The parties might conclude a confidentiality agreement regarding their settlement discussions. But as disclosure is not provided for in Bulgarian legislation, statements that are discoverable or without prejudice are not relevant. In both court and arbitration proceedings, each party presents the court with its own evidence.


Privacy and privilege

Are there any data protection, trade secret or other privacy issues for the purposes of e-disclosure/e-discovery in a proceeding?

Disclosure, including e-disclosure or e-discovery is not provided for in Bulgarian legislation. However, general rules regarding data protection, trade secrets or other secrets protected by law (eg, bank secrets) are envisaged and do apply before administrative bodies and in court proceedings. The data protection rules are implemented and synchronised with Regulation (EU) 2016/679 (the General Data Protection Regulation).

Furthermore, by adopting the Commercial Secret Protection Act in April 2019, a lot of companies, including energy companies, benefit from the exception of the statute and do not disclose full copies of their contracts even when the latter are related to court proceedings.

What are the rules in your jurisdiction regarding attorney-client privilege and work product privileges?

Pursuant to the Bulgarian Attorney Act (article 45), attorneys-at-law are obliged to keep secret the information provided to them by their clients without restriction in time. Attorneys-at-law are exempted, in their capacity as witnesses, to reveal circumstances that have been disclosed to them in their capacity as attorneys by clients or by another attorney about a client. Pursuant to the Civil Procedure Code, attorneys have the right to decline to be questioned as witnesses on the case in which they represent a client.


Must some energy disputes, as a matter of jurisdiction, first be heard before an administrative agency?

Complaints against a transmission or distribution system operator in relation to the operator’s obligations shall be referred to the Bulgarian Energy and Water Regulatory Commission, which, acting as a dispute settlement authority, is obliged to issue a decision within two months of receipt of the complaint. The decision of the energy regulator is subject to an appeal before the Sofia Administrative Court and then the first instance court decision is subject to cassation before the Supreme Administrative Court. The authority of the energy regulator to resolve disputes is implemented in article 22 of the Bulgarian Energy Act in compliance with article 37, paragraph 11 of Directive 2009/72/EC of the European Parliament and of the Council of 13 July 2009 concerning common rules for the internal market in electricity.

Law stated date

Correct on

Give the date on which the information above is accurate.

20 November 2020.