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Alternative Dispute Resolution in Bulgaria

Alternative Dispute Resolution in Bulgaria

There are two options stipulated by Bulgarian legislation that are alternative to court procedure dispute resolutions, as in the worldwide practices these are mediation and arbitration procedures.

Bulgarian Civil Procedure Code allows arbitration proceeding to be conducted on any dispute as long as it is not arising out of property rights, demesne of real estate, employment or alimony.    
The arbitration procedure is settled in the Act for International Commercial Arbitration; However, despite the title of the Act this procedure is applied not only with respect to international and commercial disputes. This Act shall apply to international commercial arbitration, based on an arbitration agreement when the place of arbitration is on the territory of the Republic of Bulgaria. The international commercial arbitration shall include civil property disputes resulting from foreign commercial relationships as well as disputes for filling in the gaps of a contract or its adaptation to changed circumstances, if the domicile or the seat of at least one of the parties is not in the Republic of Bulgaria.

Prerequisite for initiation of arbitration procedure is the arbitration consent agreed upon by the parties usually incorporated in the respective contract and obligatorily in written. The agreement is deemed to be in writing also provided it is included in correspondence exchanged between the parties.
At the Bulgarian Chamber of Commerce and Industry Arbitration Court is founded, the major institution where institutional arbitration is provided in Bulgaria. The AC settles the above-mentioned disputes provided they have been submitted to it either on grounds of an arbitration agreement or by an international treaty. Unless the parties otherwise agree, their consent to submit the dispute to the AC at the BCCI means the Rules of the AC at the BCCI are accepted.
Generally every arbitration court in Bulgaria has its procedural rules of arbitration applicable to dispute resolution. Hereafter are the basic rules of arbitration in Bulgaria applied as long as the internal rules of an institution did not provide something different instead. 
The parties are entitled to define the procedure for appointment of arbitrators in the arbitration agreement, however if they don’t the jury shall consist of a sole arbitrator or of three members. The parties are given wide range of freedom to appoint the arbitrators most eligible to resolve the dispute as an arbitrator in Bulgaria may be even a non-Bulgarian citizen. Two of the members are appointed by the parties and the third one appointed by the other two. In case a single-member jury, the arbitrator shall be chosen by mutual consent of the parties or by the Chairman of the Bulgarian Chamber of Commerce and Industry.
The parties may agree on the procedure which the arbitration court will follow during the case. In the absence of an agreement, the arbitration court shall proceed with the case in an expedient and proper manner. The parties may agree on the place where the arbitration case will be heard. In the absence of agreement, the place shall be chosen by the arbitration court, taking into consideration the circumstances of the case and the convenience of the parties. The parties may agree on the language or the languages that will be used in the arbitration proceedings. In the absence of agreement the language or the languages may be determined by the arbitration court. It may issue an instruction for all written evidences to be accompanied by a translation in the language or the languages agreed by the parties or determined by the arbitration court. The parties may agree the case to be heard in camera – i.e. only on the basis of written evidences and statements of the parties. The arbitration court may set a meeting with the participation of the parties if it is deemed necessary for the just and fair settlement of the case.
The arbitration award shall be obligatory to the parties and shall be subject to enforcement. It is liable to an appeal before the Supreme Court of Cassation only on procedural grounds and not in regard of its merits.
 Advantages of the Arbitration Procedure
  1. Avoiding the jurisdiction of the state courts of law, the parties submit the dispute to a private juridical body which they trust.
  2. The parties participate in the formation of the arbitral tribunal by the nominating the arbitrators.
  3. The dispute is settled by simplified proceedings notified in advance to both the parties. They are entitled to amend and accommodate it to the characteristics of the dispute.
  4. The parties have the option to submit the dispute to arbitrators having knowledge and experience in the specific matters involved in the case, which the court of law does not always have.
  5. The speed is one of the greatest advantages of the arbitration. The proceedings are of one instance. The cases are settled usually within 6 - 9 months
  6. The arbitration awards are final, subject to enforcement and are stable, because they are subject to recourse only by a court action on limited grounds.
  7. The arbitration procedure is confidential and not public. So the arbitration is able to avoid deterioration of the relations between the parties.
  8. The restrictions for the international jurisdiction of the courts of law do not apply to the arbitration.
  9. The non-breaching party to the contract is able to avoid the compulsoriness, disadvantages, expenses and injustice to go to law abroad.
  10. The enforcement of the arbitration award abroad is ensured by the New York Convention to a greater extent than the enforcement of the decisions of the courts of law abroad.

The Mechanism of Mediation is quite new and still not so popular in Bulgaria. The Bulgarian Mediation Act was adopted in the recent 2004. 
Mediation is stipulated as a voluntary and confidential procedure for out-of-court resolution of disputes, whereby a third party mediator assists the disputants in reaching a settlement. The scope of disputes the procedure may be applied to is much wider than the one in arbitration. Subject of mediation may be civil, commercial, labour, family and administrative disputes related to consumer rights, and other disputes between natural and/or legal persons, including when they are cross-border. Mediation shall not be conducted if a law or another statutory instrument provides another way for entering an agreement.
Mediation proceedings shall commence on the initiative of the disputants. However a proposal for resolution of the dispute through mediation may furthermore be made by the court or another competent authority whereto the dispute has been referred for settlement. The consent of the parties to resolution of a possible future dispute there between through mediation may also be stipulated as a clause of a contract. The Ministry of Justice maintains a Register of the Mediators in Bulgaria as there are strict requirements to mediators including graduating from a specific tutoring.
A mediation procedure shall be terminated:
  1. upon reaching a settlement;
  2. by mutual agreement between the parties;
  3. upon withdrawal of one of the parties;
  4. upon the death or termination of a party.
  5. with the expiry of 6 months as of the commencement of the procedure.
The content of the agreement shall be determined by the parties. It may be oral, written, or written with notarization. The agreement shall be binding solely on the disputants and may not be held adverse to any persons who did not participate in the procedure.
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