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What are the validity requirements for an arbitration agreement?
An arbitration agreement must refer to one or more defined legal relationships, regardless of whether contractual.
It must be in writing. An agreement is ‘in writing’ if it is contained in signed documents or exchanged letters, telexes, telegrams or other means of communication. An implied agreement exists if the respondent – either in writing or by statement recorded in the transcript of a hearing – accepts for the dispute to be resolved through arbitration or participates in arbitral proceedings without objecting to the competence of the tribunal. The law recently defined the forms of participation in arbitral proceedings that amount to implied acceptance. However, it is unclear if the list is exhaustive.
Enforcement of agreements
How are arbitration agreements enforced in your jurisdiction? What is the attitude of the national courts towards arbitration agreements?
Arbitration agreements are enforced indirectly – the court, on an objection of a party for the existence of an arbitration agreement, dismisses the proceedings and refers the parties to arbitration unless it finds the arbitration agreement to be “null and void, inoperative or incapable of being performed”. Under penalty of implied waiver, the objection must be made with the statement of defence.
Bulgarian courts generally tend to enforce arbitration agreements, even imperfect ones.
Unlike in other jurisdictions, a Bulgarian court would refuse to enforce a unilateral arbitration clause that grants only one of the parties a choice between arbitration and state courts.
Can an arbitral tribunal with its seat in your jurisdiction consolidate separate arbitral proceedings under one or more contracts, and, if so, in what circumstances?
Arbitration law is silent on consolidation, but the parties may include appropriate language in an arbitration agreement or refer to institutional rules that include such provisions. With one exception, the rules of the local institutions do not include consolidation provisions. However, cases have been reported where arbitrators, faced with a request for consolidation, have resolved the issue by applying their powers to determine an appropriate procedure. The conditions under which consolidation may be allowed are as follows:
- Both claims are brought under the same arbitration agreement, between the same parties and there is a sufficient connection between the claims.
- Even if the arbitration clauses are different, the claims are between the same parties, the clauses are compatible (referring to identical rules and number of arbitrators) and there is sufficient connection to warrant the consolidation.
Consolidation is not possible if different panels have already been appointed for the different proceedings, unless the parties agree otherwise.
Choice of law
How is the substantive law of the dispute determined? Where the substantive law is unclear, how will a tribunal determine what it should be?
The tribunal will resolve the dispute under the law chosen by the parties. Unless agreed otherwise, the choice of law will be construed to refer to the substantive law, not the rules on conflict of laws.
In the absence of an explicit choice of law, the tribunal will apply the law determined by the conflict of laws rules that it considers applicable. Thus, the tribunal may determine the applicable conflict of laws rules and apply the law in accordance with them.
The tribunal will always apply the terms of the contract and consider the trade usages.
Are there any provisions on the separability of arbitration agreements?
The independence of an arbitration agreement from the other terms of a contract is explicitly proclaimed in Article 19(2) of the International Commercial Arbitration Act.
Are multiparty agreements recognised?
Although the International Commercial Arbitration Act is silent on this issue, multiparty arbitration is compatible with its principles.
The rules of some local arbitral institutions contain basic provisions on multiparty arbitration. For example, the Bulgarian Chamber of Commerce and Industry (BCCI) Rules regulate the constitution of tribunals in multiparty situations. The rules of the Bulgarian Industrial Association (the second most widely used arbitration institution) do not contain these regulations, but provide for the production of a set of documents “in accordance with the number of respondents”, thus indirectly recognising multiparty arbitration.
The International Commercial Arbitration Act does not provide for third-party joinder or intervention. The BCCI Rules provides that a joinder or intervention is admissible only with the consent of the parties (and in case of a joinder, the consent of the third party).
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