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Bulgarian company sued under a fictitious case was successfully defended by Dimitrov, Petrov & Co.’s experts

20 August 2018

The experts of Dimitrov, Petrov & Co. Law Firm Encho Simeonov and Martin Zahariev, PhD have achieved yet another key success for our practice in the field of commercial arbitration. Our team assisted in preserving the business of a Bulgarian company, ordered to pay around BGN 2 000 000 (approx. EUR 1 022 000) under a fictitious arbitration case, in which this company has never taken part in, and under an arbitration agreement it has never signed.
More details on the scheme in which our client became a victim of can be found in Miroluba Benatova’s interview with attorney-at-law Encho Simeonov here.
The company defense on the case was seriously hampered because the client’s bank accounts had been frozen by a bailiff to the aforesaid amount under an initiated execution case. All of that prevented the company from performing its normal business activities and from having an effective opportunity to defend its rights. Despite the difficulties our team managed to prove that the debt was fictitious and to achieve annulment of the writ of execution used for initiating the case. As а result the attachments to the client's bank accounts have been successfully lifted and the execution case was terminated. Parallel with the civil law protection procedures there is also an ongoing criminal investigation for possibly committed crimes.
This case raises important concerns on whether and to what extent the existing legislation provides for effective counter mechanisms to fraud schemes for “draining” companies like this. At the same time, it is also a perfect example of how some deficits in the legal framework could be successfully overcome through a high level of professionalism in the approach by the defense, on one side, and by the Court and the Law enforcement agencies, on the other. Although such fraudulent schemes, which abuse the arbitration as a dispute resolution mechanism, cannot be eradicated at once, results such as the one achieved by our team show that it is possible to come up with a successful counter action and to achieve a fair outcome even in the most complicated and, at first glance, hopeless situations for the client.


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