In order to strengthen consumer rights, Bulgarian legislation has undergone a number of major changes in recent years. As a result, settlement of consumer disputes through arbitration in Bulgaria became impossible, and arbitration clauses in consumer contracts became invalid. Next, we will examine the regulation of arbitration in Bulgaria.
Non-arbitrable disputes in Bulgaria
The first major innovation was the ban on the consumer disputes resolution through arbitration in Bulgaria. All consumer disputes have been categorized as non-arbitrable.
NOTE: A consumer is any natural person who purchases goods or uses services for purposes other than his commercial activities, as well as any natural person who acts outside his commercial or professional capacity.
Thus, arbitration is not possible with respect to most contracts concluded by individuals, such as:
- about utilities;
- on consumer finance;
- purchases of goods or service packages.
To ensure the effectiveness of practical application, the new legislation also provides that:
- arbitration clauses in consumer contracts have been canceled;
- decisions made in non-arbitrable disputes become invalid;
- the courts are empowered to refuse to issue writs of execution for decisions that cannot be considered through arbitration in Bulgaria;
- making arbitral awards involving a consumer may be subject to severe sanctions.
New rules for dispute resolution via arbitration in Bulgaria
Another important development is the introduction into the local legislation of a mechanism to control arbitration institutions by a special inspection, which carries out inspections of the premises and archives of these institutions.
Based on the results of the inspection, the inspectors can make recommendations to the tribunal, and failure to comply with them may result in a fine. Obviously, this mechanism applies exclusively to arbitration institutions in Bulgaria.
While at first glance this control may appear to threaten the independence of arbitration institutions, it is designed primarily to protect consumer rights, which in practice have tended to be violated.
When settling a dispute by arbitration in Bulgaria, the parties must have online access to the case file. While such provisions have long existed, the application of this condition may create some practical problems with respect to ad hoc arbitration.
Grounds for canceling the final decision
Perhaps the most surprising change was the reduction in the grounds for setting aside an arbitral award. Now the violation of public order is not a ground for setting aside the arbitral award in Bulgaria. It should be noted that this was previously one of the important grounds for quashing a decision, as provided for in the Model Law.
This amendment was unexpected as it had nothing to do with consumer protection. In the opinion of many experts, on the contrary, it weakens the position of state courts to control arbitral awards.
Many amendments have been made to the Law on Arbitration to help better protect consumer rights. At the same time, some of them run counter to EU arbitration law. You can get more details about the novelties in the Bulgarian arbitration law during the individual consultation on the beginning of the arbitration proceedings in Bulgaria. Reach out to our experts by filling a quick contact form below.