Bulgaria
In your jurisdiction, are there any formal ADR procedures available for resolving commercial disputes other than litigating (or arbitrating) to a final hearing?
In Bulgaria there is only one formal alternative dispute resolution procedure, which is mediation. Mediation in Bulgaria is governed by the Mediation Act and is deemed to be a voluntary and confidential out-of-court dispute resolution procedure in which a third-party mediator assists disputing parties to reach an agreement. A wide array of disputes between individuals and/or legal entities, both national and cross-border, can be referred to mediation: civil, commercial, labor, family, administrative disputes related to consumer rights and others.
Parties to a dispute in Bulgaria are free to refer their dispute to any other ADR procedure that they may find suitable to resolve the dispute, such as conciliation or engaging experts to assist with an expert opinion on he disputed matter. However, such procedures have no regulation in Bulgarian legislation, are non-binding (unless the parties conclude a settlement agreement afterwards) and are rarely used. Additional ADR procedures are offered by the Commission for Consumer Protection to resolve disputes between traders and consumers.
Does engaging in ADR have any effect on potential or existing litigation or arbitration?
Yes, during the mediation process, any ongoing litigation or arbitration proceedings initiated to resolve the dispute are stayed. Mediation also stops the time running for the purpose of the statute of limitations regarding the claim.
A plaintiff who has resorted to mediation to resolve a dispute also brought before the courts, is entitled to receive reimbursement of 75% of the paid court fee for the adjudication of such dispute.
A mediation agreement may be rendered enforceable by the Bulgarian district courts upon the request of any party. If there is a pending dispute between the parties, the court handling the dispute has jurisdiction to approve any mediation agreement concluded between the parties, even if the agreement resolves a particular dispute that has not been brought before the court.
Is ADR compulsory and if so are there any consequences if a party fails to engage in ADR? If it is not compulsory are there any plans for this to change?
The Bulgarian government committed to the European Union to introduce compulsory mediation for certain civil and commercial claims. Legislation to this effect was introduced in 2023 and was set to become effective on July 1, 2024. However, shortly before its entry into force, the Bulgarian Constitutional Court declared the amendments to the Bulgarian Civil Procedure Code and the Mediation Act, which introduced compulsory mediation, unconstitutional. The Court’s reasoning was that these new rules limited the access of natural persons and legal entities to court procedures, as any court proceedings would remain suspended until the compulsory mediation process was completed. This was deemed to be in direct contradiction to the Bulgarian Constitution. The Constitutional Court’s judgment was unexpected for both the legislative and judicial branches, which supported compulsory mediation to alleviate the burden on the courts. The affected parties are now discussing how to introduce provisions for compulsory mediation that comply with constitutional norms, although this may prove challenging.
Until a solution is found, the previous procedure has been reinstated, whereby the court advises parties to refer their dispute to mediation but, the court is obliged to hear the dispute if the parties refuse.
Can the parties agree, in advance of any potential dispute, to engage in ADR?
Yes, the parties may agree in advance to refer any future disputes to mediation. However, such an agreement is not legally enforceable. If a party bypasses mediation and directly brings the dispute to court, the defendant cannot contest the admissibility of the claim on the basis of the prior mediation agreement.
When does ADR generally take place?
Mediation may occur either before a dispute is brought to the court or while the court case is pending. There is no legally mandated length of mediation – the mediation procedure is terminated either if an agreement is reached or if any of the parties withdraws from the mediation process.
Is ADR subject to without prejudice privilege and/or confidential? If not, is there any other means to protect confidential information?
Yes, all discussions within a mediation are confidential. Mediators are also prohibited from testifying in court about any information obtained through mediation.
However, confidential information exchanged during mediation may be disclosed under the following exceptions:
- For the purposes of a criminal proceeding or preserving public order;
- To protect the interests of children or safeguard a person from physical or mental harm;
- For the purposes of enforcing the mediation agreement.
Does the output from ADR create precedents?
Bulgaria operates under the continental civil law system and does not recognize legal precedents, whether established by the courts or during alternative dispute resolution (ADR) processes.
Who bears the costs of ADR?
There are no statutory rules on the distribution of costs during ADR in Bulgaria. Typically, the parties to the dispute share the costs, although, naturally, the parties may agree on a different allocation of costs.
Is your jurisdiction subject to any specific rules for cross border ADR?
There are no specific rules in Bulgaria for cross border ADR. Bulgaria has implemented the principles of EU’s Directive 2008/52/EC of the European Parliament and of the Council of 21 May 2008 on certain aspects of mediation in civil and commercial matters in the Mediation Act – i.e. both national and cross border mediation are governed by the same rules and principles outlined in the Directive – the recourse by the court to mediation, enforceability of mediation agreements, confidentiality of mediation, etc.
Like all EU member states Bulgaria is yet to accede to United Nations Convention on the International Settlement Agreements Resulting from Mediation (Singapore Convention). There is no public information available as to whether such accession is planned in the near future.
Are there any particularly unusual features of ADR in your jurisdiction that you are aware are different to other jurisdictions?
While there are no specific educational requirements, such as a law degree, mediators in Bulgaria must successfully complete training and be registered with the Bulgarian Mediators Register. These training programs are conducted by private entities that must meet certain criteria enforced by the Bulgarian Ministry of Justice.
Mediation is not applicable to proceedings that determine criminal or administrative liability (although there have been draft bills aiming to introduce mediation in the criminal procedure).
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