Arbitration as a dispute resolution mechanism has its place in Bulgaria. This is largely due to the adoption in 1988 of a special law regulating arbitration. Initially, arbitration had been applied mainly to international trade disputes, but in the last 20 years it has found serious application in disputes between Bulgarian legal entities as well. It is common practice for contracting parties to agree to submit to arbitration any potential disputes arising out of or related to their contract. This is mainly due to the swifter results produced by arbitration as a single-instance dispute resolution procedure. The possibility for the parties to nominate arbitrators they trust is also a significant factor.

The COVID-19 pandemic disrupted the holding of face-to-face hearings. In the spring of 2020, all hearings were postponed for a period of three months. Legislative changes for the introduction of virtual (remote) hearings through videoconferencing were not undertaken. However, the rules of certain Bulgarian arbitral institutions were modified to allow hearings to be held remotely (either in their entirety or partially) by videoconferencing via electronic platforms selected by arbitral tribunals.

No specific industries can be identified in which there has been a significant increase or reduction in international arbitration disputes in 2020-2021. There is no evidence that the COVID-19 pandemic has directly affected the number of arbitral proceedings.

The Arbitration Court at the Bulgarian Chamber of Commerce and Industry is the oldest and most reputable arbitral institution in Bulgaria. It has over 120 years of history. Nearly all international arbitration disputes are resolved by that arbitration court. In general, over the last ten years, hundreds of international and thousands of domestic arbitration disputes have been referred to the Arbitration Court at the Bulgarian Chamber of Commerce and Industry.

There are various other arbitral institutions in Bulgaria. However, only a limited number of disputes are referred to them. No new arbitration institutions have been established in 2020–21.

There are no specific courts in Bulgaria that are designated to hear disputes related to international arbitrations or domestic arbitrations.

In Bulgaria, international commercial arbitration is governed by a special law, namely the International Commercial Arbitration Act (ICAA), adopted in 1988.

ICAA implements the principal positions of the UNCITRAL Model Law on International Commercial Arbitration (1985 version).

Arbitration as a tool for resolving pecuniary disputes, different from state justice, has long-lasting traditions in Bulgaria. Legislative provisions to this effect were included in the Civil Procedures Acts of 1892 and 1930. Until the adoption of the current ICAA, limited regulations were also contained in the Civil Procedures Code.

Last year did not see any amendments to ICAA, nor are there any in the pipeline.

The arbitration agreement must be in writing. The written form is a condition for its validity. Article 7 of ICAA adopts fully the definition of arbitration agreement contained in Article 7, paragraph 1 of the UNCITRAL Model Law. Article 7 of ICAA defines an arbitration agreement as the agreement of the parties to submit to arbitration all or certain disputes which may arise or have arisen between them in respect of a defined contractual or non-contractual relationship. It may be an arbitration clause in another contract or a separate agreement. The arbitration agreement should relate to a specific legal relationship. The dispute itself may be an existing one or a future one. The written form shall be deemed complied with not only where the agreement to arbitrate is expressed in a single document, but also where the offer and the acceptance are contained in exchanged letters, faxes or other means of communication which are in writing. The written form shall also be considered observed where the arbitration clause is contained in general terms and conditions prepared by one of the parties, which are referred to by the contract signed by both parties. Consent may be given either by signing the general terms and conditions or by a written statement of their acceptance. With respect to a framework contract which does not contain an arbitration clause, case law takes the view that such clause may be agreed in the specific contract concluded between the parties on the basis of the framework contract. In these cases, there is an agreement to arbitrate disputes not only with respect to the defined legal relationship, but also with respect to other contracts concluded on the basis of the framework contract.

ICAA allows one more route for the valid conclusion of an arbitration agreement, namely before an arbitral tribunal in the framework of a pending arbitration. An arbitration agreement shall be deemed to exist where the respondent, in writing or with a statement noted in the minutes of the arbitral hearing, consents to the resolution of the dispute by arbitration. Even if there is no such express consent of the respondent, the law deems the existence of a valid arbitration agreement where the respondent participates in the arbitral proceedings by filing a written response, presenting evidence, filing a counterclaim or attending the arbitral hearings without challenging the jurisdiction of the arbitral tribunal. Theory characterises the latter as an implied arbitration agreement.

Explicit consent is required for the transfer of the arbitration agreement in the case of a change of the parties to the substantive contract. In recent years, this opinion has been consistently upheld in the case law of the Supreme Court of Cassation. The arbitration clause remains in effect in the case of universal successions – inheritance by law or will, or respectively reorganisation of a legal entity, where its assets are transferred to a new legal entity or entities. Universal successions are characterised by a continuation of the existence of the individual or the legal entity in terms of their property. Therefore, any related dispute, whether pending or newly arisen, is covered by the arbitration clause. In a private succession, where a separate object from the set of pecuniary rights and obligations held by an individual or a legal entity is transferred by transaction or compulsion, the arbitration clause shall not cover disputes arising between the private successor and the other party to the underlying contract, save where the parties have explicitly agreed in the transfer deed to maintain its effect in the event of a dispute after the transfer and the adherence of the new party.

It is settled case law of the Supreme Court of Cassation that the arbitration agreement has a relatively independent nature vis-à-vis the underlying contract. Further, it is subject to a separate legal regime and is not an accessory to the contract, respectively to the substantive legal relationship arising therefrom. The rights and obligations of the parties to the substantive legal relationship are different from the rights and obligations under the arbitration agreement. Consequently, the right of a party to submit to arbitration a dispute arising in connection with the substantive legal relationship cannot be transferred together with the substantive rights, unless the other party has expressly agreed in writing to the transfer.

Disputes that may be the subject of arbitration agreements are arbitrable. The admissibility of the arbitration agreement coincides with the admissibility of arbitration in general. In this vein, arbitration is not admissible in all legal disputes. ICAA and the Civil Procedures Code determine the range of arbitrable disputes by two distinguishing criteria, namely:

• a first one being that only pecuniary disputes are arbitrable; and
• a second one restricting the first and carving out from the principal arbitrability of pecuniary disputes those relating to in rem rights, possession; alimony; and employment rights and disputes in which one of the parties is a consumer, within the meaning of the Consumer Protection Act.

According to ICAA, arbitral awards rendered in non-arbitrable disputes are null and void.

There is divergent case law with regard to the law applicable to an arbitration agreement in the absence of an explicit choice of law made by the parties. The most common approach is that the place of arbitration determines the applicable law. In other cases, where there is a choice of law clause applicable to the substantive contract, the same is considered to apply to the arbitration clause as well.

According to ICAA, the arbitration clause is independent of the contract in which it is included. Case law takes the view that the nullity of the substantive contract does not result in invalidity of the arbitration clause, which is an independent procedural contract and therefore autonomous. A dispute concerning the validity of the substantive contract will be subject to arbitration provided that there is an agreement to arbitrate.

Cases where the contract is null and void due to lack of consent are considered differently. In these cases, the invalidity is not due to a contradiction with mandatory legal provisions or bonos mores. Rather, it is the result of the statements of intent of the parties being flawed. Hence, it applies to both the substantive contract and the arbitration clause and results in their nullity. The outcome is the same in the case of a contract with an arbitration clause which is voidable due to being concluded by an incompetent person or by their agents without observing the established requirements for such agents. In this case, the flawed intent of a party to the contract, in the sense that such party is unable to understand the nature and significance of its actions and to guide them, results in invalidity of the contract as a whole, including the arbitration clause.

According to ICAA arbitrators must: (a) be of legal capacity and of legal age; (b) not have been convicted of an intentional crime of a general nature; (c) have a higher education; (d) have at least eight years of professional experience; and (e) possess high moral qualities.

There are no restrictions regarding the nationality of arbitrators in international arbitrations and domestic arbitrations in which one of the parties is an enterprise with a predominant foreign participation. In these cases, arbitrators may be of foreign nationality. In domestic arbitrations, however, there is a mandatory requirement that arbitrators must be Bulgarian citizens.

ICAA applies in the absence of an agreed procedure between the parties regarding the nomination of arbitrators and the composition of the arbitral tribunal or if the agreed procedure cannot be carried out for any objective reasons. The law stipulates that if the arbitral tribunal consists of three arbitrators, each party shall appoint one arbitrator, who shall in turn appoint the third. If a party fails to appoint an arbitrator within 30 days of receiving the other party's request or if the two arbitrators do not agree on the third arbitrator within 30 days of their appointment, the President of the Bulgarian Chamber of Commerce and Industry shall appoint the arbitrator on the request of one of the parties.

In the case of a sole arbitrator, if the parties cannot reach an agreement, the arbitrator shall be appointed by the President of the Bulgarian Chamber of Commerce and Industry.

The court cannot interfere in the nomination of arbitrators. Even where arbitrators are appointed by the President of the Bulgarian Chamber of Commerce and Industry, his or her decision is not subject to judicial review.

The court has the power to appoint arbitrators only in disputes that do not arise from commercial transactions. In such cases, the appointing authority shall be Sofia City Court.

An arbitrator may be challenged only if there are circumstances which give rise to reasonable doubts as to the arbitrator’s impartiality or independence, or if the arbitrator does not possess the necessary qualifications agreed by the parties. A party may challenge the arbitrator appointed by it or appointed with its participation only for reasons of which it became aware after the arbitrator’s appointment.

In case of lack of agreed challenge procedure, the same may be initiated within 15 days before the arbitral tribunal. If the challenge is unsuccessful, the challenging party is entitled within seven days to apply to Sofia City Court to decide on the challenge.   

ICAA mandates that any person nominated as an arbitrator must indicate all circumstances that may give rise to reasonable doubts as to his or her impartiality or independence, including inter alia any conflict of interests. This obligation survives the arbitrator’s appointment.

According to Bulgarian law, the following disputes are non-arbitrable:

• disputes relating to in rem rights or possession of real estate properties;
• alimony disputes;
• disputes over employment rights; and
• disputes in which one of the parties is a consumer, within the meaning of the Consumer Protection Act.

Consumer disputes were excluded from the scope of arbitrable disputes relatively recently – in 2017 by means of an amendment to the Civil Procedures Code. According to the Consumer Protection Act, a consumer is an individual acquiring goods or using services that are not intended for commercial or professional activity, as well as any individual who, as a party to a contract under the Consumer Protection Act, acts outside the scope of their commercial or professional activity.

In addition to the disputes above, there are other non-arbitrable disputes, governed by various laws, which are submitted to the exclusive jurisdiction of state courts, for example, insolvency disputes, disputes concerning the validity of legal entities and those concerning the validity of the decisions of their bodies.

Bulgarian law has adopted the competence-competence principle. The arbitral tribunal is entitled to assess the validity of the arbitration agreement and rule on its own jurisdiction when challenged due to non-existence or invalidity of the arbitration agreement.

The court has authority to rule on the jurisdiction of the arbitral tribunal to resolve a specific dispute only in proceedings to set aside the arbitral award. This means that the court’s review of the arbitral jurisdiction takes place only where the arbitral tribunal has established that an arbitration agreement exists. The ruling or award by which the arbitral tribunal terminates the proceedings due to absence or invalidity of the arbitration agreement is not subject to judicial review. 

The Supreme Court of Cassation has the power to set aside the arbitral award if it determines that the arbitration agreement which established the jurisdiction of the arbitral tribunal is absent or invalid. The court is also entitled to set aside the arbitral award if it concerns a dispute beyond the scope of the arbitration agreement or decides matters outside the subject matter of the dispute.

The procedure to set aside an arbitral award is not part of the arbitration proceedings. The Supreme Court of Cassation’s review is limited to specific grounds only, which are generally related to the competence of the arbitration and the parties’ right to defence. Therefore, the court is not entitled to review the dispute on the merits or to control the correctness and reasoning of the arbitral award.

The parties may challenge the jurisdiction of the arbitration before a court only after the completion of the arbitral proceedings in the procedure to set aside the arbitral award. The action to set aside the arbitral award must be brought forward within three months of the date the award is notified to the party. The Supreme Court of Cassation takes the view that this term is of a preclusive nature.

The Supreme Court of Cassation is not entitled to review the arbitral award on the merits. The arbitral award may not be challenged for breach of substantive law, incomplete evidence or lack of reasoning. The review of the court is limited on the grounds specified exhaustively in the law. Further details are provided in 11.1 Grounds for Appeal.

If the state court sets aside the arbitral award with a final decision due to the lack of a valid arbitration agreement, the party with standing is entitled to bring forward a lawsuit in relation to the dispute before the competent state court. Where the arbitral award is set aside on any of the other grounds, the state court refers the case back to the arbitration court, in which case each party is entitled to request that the case be heard by other arbitrators. 

With a 2017 amendment to the law, the “contradiction of the arbitral award with the public policy in the Republic of Bulgaria” was removed as a ground for the setting aside of arbitral awards, which provoked divergent reactions.

According to ICAA, the court which has been seized with a claim relating to a dispute which is subject to an arbitration agreement is obliged to terminate the case if the party resorts to the arbitration agreement within the time limit for response to the statement of claim. The court is entitled to assess the validity of the arbitration agreement and to adjudicate the dispute if it considers that the arbitration agreement is null and void, invalid or unenforceable. These rules are mandatory and are followed by the courts.

According to Bulgarian law, the arbitral tribunal does not have jurisdiction over individuals or entities that are not parties to the arbitration agreement or signatories to the contract containing the arbitration clause. Third parties may only be bound by the arbitration clause in the case of a universal legal succession of a party.

Unless otherwise agreed upon between the parties, at the request of the plaintiff, the arbitral tribunal may order interim relief guaranteeing the rights of the plaintiff. However, interim relief securing a future claim is not permissible. The arbitral tribunal is entitled to order interim relief, which only affects the parties to the dispute, which are bound by the arbitration agreement. Interim relief against third parties is not allowed. The admission of interim relief may be subject to the payment of a guarantee. In its motion for interim relief, the plaintiff must indicate the specific measure or measures within which the arbitral tribunal shall assess the motion on the merits. The arbitral tribunal has discretion whether to admit or not the interim relief, subject to the restriction that it must bind a party to the dispute. Interim relief ordered by an arbitral tribunal cannot be enforced. If the party affected by the interim relief fails to abide by it, that party shall be liable for any damages caused to the other party.

Each of the parties to the arbitration agreement may file a motion with the competent court to secure a future claim or a claim that is already pending in arbitral proceedings. Relief shall be admitted subject to the party being able to establish the cumulative conditions including the need of protection by interim relief and the probable validity of the claim. The courts in Bulgaria are competent to order interim relief on property located in Bulgaria, regardless of whether the arbitration has its seat in Bulgaria or in a foreign country. The law does not provide an exhaustive list of admissible interim measures. The most commonly applied ones are preventive attachments on real estate properties and the seizure of movable property or receivables. Other appropriate measures may be allowed at request of the claimant.

The court shall not have the power to impose coercive enforcement of interim relief ordered by an arbitral tribunal.

There are no special provisions for emergency arbitrators.

Bulgarian law does not allow interim relief for costs.

ICAA contains rules governing the procedure of arbitration. These rules are mainly discretionary and allow parties to arbitral proceedings to agree on different rules. The mandatory rules that must be observed by parties are limited in number. The same holds true for the rules of institutional and ad hoc arbitral institutions. If the parties have agreed on rules of procedure, the same have priority over the rules of the respective arbitral institution and over ICAA, insofar as they do not contradict mandatory rules.

The main procedural step without which arbitral proceedings are inconceivable is the composition of the arbitral tribunal. ICAA contains rules governing the formation of the arbitral tribunal, as well as rules governing the proceedings.

The arbitrator's primary duty is to be independent and impartial.

There are no specific qualifications or other requirements for legal representatives in arbitral proceedings. In particular, there are no restrictions as to the nationality and/or qualification of counsels.

Freedom of contract extends to the presentation and collection of evidence and hence applies to evidence in arbitral proceedings. Parties may agree on the means of proof (and their limitations) and the procedure to be followed in collecting evidence, including by concluding a contract to that effect. The consent of the parties to submit the dispute to arbitration, expressed by reference to the UNCITRAL Arbitration Rules or by referring the dispute to an institutional arbitration which has its own rules, means the adoption of the rules of evidence set out therein. This does not restrict the parties from agreeing on other rules than the ones provided. 

If the parties have not agreed on the rules of evidence, the rules of ICAA shall apply. If they are incomplete the arbitral tribunal shall consider the case in a manner it deems appropriate and in accordance with its reasonable discretion. The parties’ right to adversarial proceedings and the principle of the parties’ equality must be observed in the collection of evidence, whereas the arbitral tribunal has wide powers to allow the evidence requested by the parties at any time during the proceedings until completion of the oral arguments. The limitation periods for evidentiary requests and the restrictions on the admissibility of certain means of proof (eg, testimony) in state courts do not apply. The arbitral tribunal is not limited in resorting to, and it is also common practice to apply, certain rules of court procedures by notifying the parties in advance and indicating the way in which they will be applied. The arbitral tribunal may set a time limit for the submission of evidence, which may be extended or restored if there are valid reasons proven by the party.

The arbitral tribunal is not bound by the rules of evidence provided for in the Civil Procedures Code. Written testimony of witnesses and witnesses’ cross-examination are admissible in arbitral proceedings. The arbitrators are free in assessing their probative value.

ICAA contains scarce rules of evidence. Written evidence shall be submitted in original or in a copy certified by the party. Electronic correspondence may be presented as evidence as well. At the request of a party or on their own initiative, the arbitrators shall appoint expert witnesses. Unlike in court proceedings, an expert witness’s report is written evidence and its presentation is sufficient for its acceptance. The expert witness will be summoned to a face-to-face hearing only if one of the parties so requests or the arbitral tribunal finds that the expert’s appearance is necessary to answer questions relevant to the dispute. Other expert witnesses may be appointed to report on the same issues on the initiative of a party. Expert witnesses’ reports shall be submitted to the parties in advance of the face-to-face hearing at which they shall be discussed and accepted. 

The rules of evidence applied in arbitration are influenced by the need to give the parties the widest possible and most equal opportunity to prove their factual assertions in the single-instance arbitration procedure. The parties are free to agree on the application of the IBA Rules on the Taking of Evidence in International Arbitration. 

The arbitral tribunal may request the parties to give expert witnesses access to documents, goods or other items that are needed by the expert for their reports. A party’s failure to comply with the tribunal’s request may result in adverse evidentiary consequences. If a party creates obstacles to the collection of evidence admitted by the arbitral tribunal, the tribunal may consider such facts as proven. ICAA does not contain specific rules on the taking of testimony. The arbitral tribunal does not have the power to summon witnesses. Witnesses will be questioned if brought by the party that named them and clarified what circumstances they will testify to. Witnesses may also be questioned remotely by videoconference provided that the moving party submits a reasoned motion to that effect within a reasonable time before the hearing. The arbitral tribunal does not have the power to oblige third parties or public institutions to provide documents or to give expert witnesses access to documents or items relevant to the dispute. This may be achieved through the assistance of the state court at the request of a party or on the initiative of the arbitrators. The assistance of the state court may also be sought to secure the collection of evidence in the case of a danger that evidence may be lost or destroyed which necessitates its collection before the initiation of the arbitral proceedings. This option applies to all means of proof admissible under the Civil Procedures Code, including court certificates to obtain documents, the submission of documents by third parties or institutions, and summoning and questioning of witnesses. The court of competent jurisdiction to assist or collect the evidence is the district court. The arbitrators have the right to participate in the questioning of witnesses. As a rule, deciding on the motion for assistance does not necessitate the holding of a face-to-face court hearing, save for the collection of oral evidence (testimony or questioning of expert witnesses). 

Bulgarian law does not contain rules on the confidentiality of arbitral proceedings. However, there is no doubt that one of the paramount principles of arbitration is confidentiality, which excludes publicity in arbitral proceedings. The rules of arbitration of the various arbitration courts set out that the papers and documents submitted by the parties shall be used only in the specific proceedings and shall be treated as confidential information, which may not be disclosed to parties other than the participants in the arbitral proceedings.

Data access is granted to the arbitrator/arbitrators appointed in the specific proceeding, as well as to the expert witnesses, the parties and the employees of the secretariat of the institutional arbitration, who are bound by a requirement for confidentiality and non-disclosure of personal data.

Only persons with functions in the arbitral proceedings (arbitrators, parties, witnesses, expert witnesses) may attend face-to-face hearings. Other persons may attend the hearings subject to the parties’ explicit consent stated in the minutes of the hearing. 

According to the Rules of the Arbitration Court at the Bulgarian Chamber of Commerce and Industry, the President of the Arbitration Court may authorise the publication of arbitral awards in electronic databases, provided that the three-month term to set aside such awards has expired. However, the names of the parties, as well as data which may be detrimental to the parties’ interests, cannot be published.

The President of the Arbitration Court is entitled to exclude from the publications other data, the disclosure of which is deemed inappropriate. 

Excluding publicity in face-to-face court hearings before the Supreme Court of Cassation in actions to set aside arbitral awards shall be ruled either ex officio by the court or at the request of a party. In such a case the right to attend the hearing belongs to parties, their counsels, the witnesses and the expert witnesses, as well as to persons allowed by the court.

Arbitral awards in arbitrations with their seat in Bulgaria must meet the following requirements regarding their form and content:

• the arbitral award must be in writing and signed by the arbitrator(s);
• when the arbitral tribunal is composed of more than one arbitrator, the signatures of the majority of the members of the arbitral tribunal shall be sufficient if the signatories have indicated the reason for the missing signature;
• when the arbitral tribunal is composed of more than one arbitrator, the award shall be made by a majority decision, unless the parties have agreed otherwise; the arbitrator who has remained of a dissenting opinion must sign the award and state in writing his or her dissenting opinion, which shall be attached to the award; if there is no majority, the award shall be made by the President of the arbitral tribunal;
• the award must be reasoned, except in two cases: (a) if the parties have agreed otherwise; or (b) in the case of an award by consent, where the parties have reached a settlement and have requested that the settlement shall be recorded in the form of an award made by consent of the parties; and
• the award shall indicate the date it is made, as well as the seat of the arbitration.

The arbitral award shall be notified to the parties. The award is deemed notified and effective upon its delivery to one of the parties, even if the other has not received it. 

ICAA does not provide for a time limit within which the arbitral tribunal must render the award. The current rules of certain arbitral institutions provide for such time limits, which are usually up to 30 days from the expiration of the deadline for submission of written statements by the parties. In cases of factual and legal complexity, the time limit for rendering the award is two months; however, if needed, the President of the arbitral court may extend the time limit.

Bulgarian law does not provide an exhaustive list of remedies that can be awarded by arbitral tribunals. Generally, the remedies are nearly identical to the ones available to state courts.

The arbitral tribunal resolves the dispute by applying the substantive law chosen by the parties, ie, in international arbitrations the principle of autonomy of will applies. The possible remedies, as well as their restrictions and the time limits for their application, are prescribed by the applicable substantive law. Unlike other legal systems, in Bulgaria the arbitral tribunal cannot be empowered by the parties to adjudicate the matter only ex aequo et bono and not according to the applicable substantive law. Punitive damages are unknown to Bulgarian law.

ICAA does not contain specific rules on the recovery of interest and costs in arbitral proceedings. In institutional arbitrations the distribution of the costs is made in accordance with their rules and rates. Costs are awarded at the express request of a party and at the discretion of the arbitral tribunal. The decision on the costs is part of the arbitral award. Arbitral tribunals award costs in accordance with the “costs follow the event” principle, which also applies to state courts. The general rule is that costs are distributed between the parties according to the outcome of the case, including in the event of termination of the proceedings due to lack of jurisdiction. A party may seek also the recovery of costs incurred in proceedings for interim relief before a state court, which include state fees and attorney’s fees, which the party is a position to prove. 

Recovery of interest is subject to the applicable substantive law. Upon the explicit request of a party, the arbitral tribunal may award legal interest on a due monetary claim both for the period before and for the period after filing the claim until final payment.

The arbitral award is final and ends the dispute. An appeal against awards is not provided for by law.

According to ICAA an award may be set aside, provided that:

• a party lacked capacity to act at the time of conclusion of the arbitration agreement;
• the arbitration agreement had not been concluded or was deemed void pursuant to the applicable law chosen by the parties or, in the case of absence of such a choice, pursuant to ICAA;
• a party had not been duly notified of the appointment of an arbitrator or of the arbitral proceedings or for reasons beyond its control a party was not in a position to participate in the proceedings;
• the award settled a dispute which had not been provided for in the arbitration agreement or contains qualifications on issues beyond the subject of the dispute; or
• the constitution of the arbitral tribunal or of the arbitral proceedings was not in conformity with the agreement of the parties unless it contradicted the mandatory provisions of ICAA, or in the absence of an agreement, in case the provisions of ICAA had not been applied.

In setting-aside actions, the court’s review is limited only to the grounds stated by the plaintiff. As an exception, the court monitors ex officio whether the dispute is non-arbitrable.

Setting aside an arbitral award is a form of state control over the arbitration. The relevant rules are mandatory. An agreement which excludes that control or modifies it is void.

It is settled case law that the review of the Supreme Court of Cassation does not extend to the merits of the substantive dispute – no “révision au fond”. Judicial review is limited to the setting-aside grounds asserted by the plaintiff, with the exception of non-arbitrability, which is monitored by the court ex officio.

Bulgaria ratified the New York Convention in 1961. The convention entered into force in 1962. Upon signing the Convention, Bulgaria made a reservation that it shall apply the Convention to arbitral awards rendered in one of the contracting states. For awards rendered in a non-contracting state, Bulgaria shall apply the Convention but only subject to the condition of reciprocity.

Bulgaria is also a contracting state to the 1961 European Convention on International Commercial Arbitration (ratified and in force since 1964), the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ratified in 2000 and in force as of 18 May 2001) and several bilateral agreements governing the mutual recognition and enforcement of arbitral awards.

Arbitral awards in arbitrations with their seat in Bulgaria have identical legal consequences to and the same manner of enforcement as the acts of state courts. They are a valid ground for enforcement. The motion for the issuance of a writ of execution must be submitted to the district court in the area of ​​the debtor's residence or seat. The motion should be accompanied by a certified original of the arbitral award, as well as evidence that it has been notified to the parties. Following a 2017 amendment to ICAA, the court considering the motion is entitled to deny the issuance of a writ of execution if it finds that the arbitral award is null and void, ie, rendered in a non-arbitrable dispute.  

The recognition and enforcement of foreign arbitral awards is carried out in accordance with the international agreements concluded by Bulgaria. Unless they provide otherwise, Sofia City Court has exclusive jurisdiction. The procedure is subject to the rules of the Civil Procedures Code, as well as to certain rules provided for in the Private International Law Code. Nevertheless, the debtor’s right to file an objection that the debt is extinguished by prescription is excluded. The procedure is of an adversarial nature. The court’s decision, regardless of whether it upholds or dismisses the motion, is subject to appellate and cassation appeal. It is settled case law that the grounds to refuse the recognition and enforcement under Article V, Section 2 of the New York Convention shall be applied ex officio, while those under Article V, Section 1 shall be applied only subject to an objection by the respondent within the time limit to answer.

Bulgarian courts do not allow the recognition and enforcement of foreign arbitral awards which have been set aside or the enforcement of which has been suspended in accordance with the law of the state where they were rendered. The decision to set aside the award should have entered into force.

Analysis of the case law of the Bulgarian courts shows that the refusal to recognise and enforce a foreign arbitral award is limited to exceptional cases. In addition, the contradiction with public policy criterion is applied very carefully as a ground for refusal, and courts tend to interpret it restrictively. The assessment is made on the basis of the factual circumstances of each case. Public policy has both substantive and procedural aspects. Failure to comply with the principles of adversarial proceedings and equality of the parties, as well as with the principle of establishing the truth, is defined as a violation of procedural public policy. These have been rarely inferred by Bulgarian courts as grounds to refuse the recognition and enforcement of foreign arbitral awards. The substantive aspects of public policy comprise mandatory provisions establishing fundamental principles of the legal system. Case law, however, does not offer examples of refusal to recognise and enforce arbitral awards on such grounds.

Bulgarian law does not contain special rules for class-action arbitration. Class actions are subject to a special court procedure before state courts. Analysis of the case law shows that such actions are brought forward most often by the Consumer Protection Commission in defence of consumers’ rights.

There is no special ethical code applicable only to arbitration.

Bulgarian attorneys-at-law are bound by the Bar Act and the Attorneys’ Ethical Code, adopted by Supreme Bar Council. However, these rules do not apply to foreign attorneys-at-law (from third countries) who participate in arbitral proceedings in Bulgaria. 

A number of institutional arbitrations have adopted ethical rules of conduct for arbitrators. Their purpose is to support the professionalism and quality of work of arbitrators, to affirm the principles of fairness and impartiality of arbitration, to raise public confidence in the arbitration as a dispute resolution tool, and to create standards of conduct for arbitrators.

Third-party funding is not regulated by Bulgarian law. This is true for both arbitration and state justice. Third-party funding is not prohibited by law either. There are, however, certain restrictions to its application: (a) according to Bulgarian procedural law, a person is not entitled to bring action for the rights of another person whether in court or in arbitration, ie, the right to bring action belongs only to the parties to the substantive relationship, which will be the subject of protection in the proceedings; and (b) recovery of costs is allowed only if such costs have been paid by a party in the proceedings and not by a third party.

Neither the law nor the rules of institutional arbitrations provide rules on the consolidation of arbitral proceedings. A consolidation would only be possible if the parties explicitly consented to it.

See 5.7 Third Parties.