Bulgaria
Implementation of the European Directive on representative actions
Which national regulations transpose the Directive into national law?
The Directive has not yet been transposed into Bulgarian law. On 12 June 2024 a draft bill for the amendment of the Bulgarian Consumer Protection Act (Закон за защита на потребителите) (“CPA”) and the Bulgarian Civil Procedure Code (Граждански процесуален кодекс) (“CPC”) was published for a discussion by the general public.
This draft bill aims to implement the requirements of the Directive and overhaul the class action procedure currently present in the CPA and the CPC which has seen quite limited use to date.
Who is entitled to bring a representative action?
Under the current legal regime the following entities can file a representative action:
- qualified Bulgarian consumer organizations, included in a list published by the Bulgarian Minister of Economy and Industry. To be included in this list the consumer organization has to meet multiple criteria, including – to be registered as a non-profit entity for the public benefit, to have performed consumer protection activities, to be independent from commercial financing, etc.;
- the Bulgarian Commission for Protection of Competition;
- consumer organizations from other EU member states – only for infringements committed in Bulgaria which have caused damage in this member state.
The draft bill aims to expand the above list, adding the following entities entitled to bring an action: one or more transnational consumer organizations dedicated to safeguarding consumer interests across multiple EU member states.
What can be the subject matter of a representative action?
Under the CPA a representative action can be brought for any infringement of collective interests of consumers of one of the exhaustively listed pieces of Bulgarian and European legislation, in the fields of consumer protection, healthcare, tourism, financial services, etc. Unlike other countries Bulgaria has not set a specific threshold what constitutes an infringement of “collective interests of consumers” and does not differentiate between tort and contractual liability with regard to such actions.
The draft bill significantly expands the range of admissible subject matters of the representative actions for the protection of the collective interests of consumers – to more than 54 legal instruments of Bulgarian and EU law. New subject matters include data protection, energy sector issues, telecommunications, and more.
Which individual consumers are represented in a representative action?
Individual consumers are entitled to participate in a representative action through an opt-in model. Should they choose to participate they are no longer eligible to file an individual action against the trader for the same infringement.
Under the draft bill, after ruling that a representative action is admissible (in the first stage of the representative action), the court is obliged to determine how the representative action shall be brought to the attention of individual consumers, as well as the deadline for them to join the proceeding.
What will be the outcome of a representative action?
While the current regulation on the matter is very sparse, the draft bill lays down more detailed provision on the possible outcomes of a representative action.
In any case, while the representative action is ongoing, the court may order interim measures aimed at protection of the collective interests of the consumers.
If the representative actions is found as well-founded by the court:
- if the plaintiff sought an injunction – the court orders the defendant to cease and desist the established violation or carry out additional remedial measures such as amendment of standard contractual terms;
- if the plaintiff sough compensation – the court determines the amount of compensation due, the manner and deadline for payment;
In any case the court may order the defendant to publicly disclose the court decision in a manner the court sees fit and at defendant’s expense.
After its entry into force, the court decision may be used by any party as evidence in an action against the same trader for the same violation.
Are there particular rules for the disclosure of evidence?
Currently there are no particular rules for the disclosure of evidence in representative actions, i.e. the general principles of Bulgarian civil procedure apply.
While this largely remains true under the overhaul of the representative actions under the draft bill for amendment of the CPA and CPC, the bill introduces some new auxiliary rules regarding the proportionality and confidentiality of disclosure of evidence requests. The court reviewing a representative action is entitled to review and assess the proportionality and confidentiality of evidence requests, taking into account: their relevance to the case, the volume of the evidence request and whether the requested documents contain confidential information regarding third parties.
The draft bill also introduces a new administrative sanction for individuals and legal entities which does not comply with a court request for the disclosure of evidence in a representative action, the fines ranging between approx. EUR 1,000 and EUR 10,000 for individuals and between approx. EUR 1,500 and EUR 35,000 for legal entities.
Is third party funding possible?
While the current legal regime remains silent on this matter, third party funding is allowed under the draft bill. However, during the first stage of the proceeding (admission of the representative action) the court is entitled to review any third party funding for of the action and rule whether it constitutes a conflict of interests for the consumer organization that brought the action (if it is provided by a third party that has commercial interests in the outcome of the case). Should the court assess that such conflict of interest is possible, the court is entitled to request additional information from the consumer organization on the use of the third party funding or even to mandate the consumer organization to change the funding structure or reject the third party funding.
Conclusion
High hopes are placed on the draft bill to implement the Representative Actions Directive in Bulgarian legislation. Although already present as an option in Bulgarian law, the current regime for collective action is limited, quite formalistic and rarely used. The new proposal aims to streamline the process, greatly expand the right of access to the procedure, including by individual consumers and lay down a more detailed list of rules regarding the course of the procedure and the effects of the court decision.
Perhaps, this is why the draft bill has already been met with opposition from business organizations which have filed multiple objections and proposals for amendment of the bill aimed at limiting the right of access or effects of representative actions. It remains to be seen whether the bill will be adopted by the Bulgarian Parliament as proposed or will undergo significant amendments prior to its promulgation.
Contact
Philip Kiossev
T: +359 2 439 0707 E: philip.kiossev@eversheds-sutherland.bg
Victoria Tzonkova
T: +359 2 439 0707 E: victoria.tzonkova@eversheds-sutherland.bg
© Eversheds Sutherland. All rights reserved. Eversheds Sutherland is a global provider of legal and other services operating through various separate and distinct legal entities. Eversheds Sutherland is the name and brand under which the members of Eversheds Sutherland Limited (Eversheds Sutherland (International) LLP and Eversheds Sutherland (US) LLP) and their respective controlled, managed and affiliated firms and the members of Eversheds Sutherland (Europe) Limited (each an "Eversheds Sutherland Entity" and together the "Eversheds Sutherland Entities") provide legal or other services to clients around the world. Eversheds Sutherland Entities are constituted and regulated in accordance with relevant local regulatory and legal requirements and operate in accordance with their locally registered names. The use of the name Eversheds Sutherland, is for description purposes only and does not imply that the Eversheds Sutherland Entities are in a partnership or are part of a global LLP. The responsibility for the provision of services to the client is defined in the terms of engagement between the instructed firm and the client.