20 years together

June 2012

30 June 2012

On June 5-6, 2012, Metodi Baykushev, partner at Dimitrov, Petrov & Co. Law Firm, participated in the International Plant Engineering and Construction, an advanced international FIDIC seminar, organized in Vienna by the International Chamber of Commerce, Austria. Various issues concerning the managing of contracts and the prevention and resolution of disputes were discussed on the seminar and the following topics were examined: FIDIC – the “Art of Mastering” Construction Contracts, Risk Prevention from Contract Negotiation to Contract Execution and Dispute Management after Contract Execution, and Compliance in International Construction Contracts.

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Decree No 100 of May 29, 2012 on Calculation of the Statutory Interest Rate on Overdue Liabilities in Bulgarian and Foreign Currency

In the State Gazette, issue 42 of June 5, 2012 Decree No 100 of May 29, 2012 of the Council of Ministers on the Calculation of the Statutory Interest Rate on Overdue Liabilities in Bulgarian and Foreign Currency was promulgated. The Decree is issued on the grounds of Art. 86 of the Obligations and Contracts Act and repeals the Council of Ministers Decree No 72 of April 8, 1994 on the Calculation of the Statutory Interest Rate on Overdue Liabilities in Bulgarian and Foreign Currency. The new Decree enters into force as from July 1, 2012.

The new Decree preserves some of the basic principles specific to the existing regulation. The Decree divides the liabilities into two types – in Bulgarian levs (BGN) and in foreign currency. The annual statutory interest rate on overdue liabilities in BGN is still the base interest rate set by the Bulgarian National Bank plus 10 points, and the daily rate is equivalent to 1/360 part of the annual rate.

In contrast to the existing regulation which calculates one interest rate for all liabilities in foreign currency, the new Decree distinguishes between liabilities in euro – Art. 1, Para 1, item 2 – and in other currencies – Art. 1, Para 1, item 3.

Another important novelty is the method of calculating the due legal interest. At present, BNB sets the legal interest rate for each separate month, which is announced at the Bank’s web page on the first day of the respective month.

The new regulation as of July 1, 2012 abandons this approach and sets a new method of calculation of the legal interest for the respective half-year – the first one being from January 1 up to June 30, and the second one – from July 1 up to December 31. It is on account of this that Art. 1, Para 3 of the Decree stipulates that the legal interests in force from January 1 of the current year are applicable to the first half of the respective year. The legal interests in force from July, 1 are applicable for the second half of the respective year.

In brief, instead of the current twelve legal interests applicable for one year, as of July 1, 2012 there will be only two legal interests.

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Public Private Partnership Act

The Public Private Partnership Act (PPPA) was promulgated in the State Gazette, issue 45 of June 15, 2012 and enters into force on January 1, 2013, except for Sections 4, 5, 7, 8, 9, 10, 13 of the Transitional and Final Provisions, which enter into force on September 1, 2012.

The Act regulates the terms and conditions for implementing public-private partnership as it aims at developing high-quality and affordable services of public interest, promoting private investments in construction and maintenance of technical and social infrastructure sites as well as guaranteeing the protection of public assets.

In the Act the term “public-private partnership” (PPP) is defined as a long-term contract partnership between one or more public partners, on the one hand, and one or more private partners, on the other hand, for the implementation of an activity of public interest, achieving a better value of the invested public means and allocating risks between the partners. The provisions of the PPPA apply for the cases not regulated by the Public Procurement Act (PPA) and the Concession Act.

The PPPA also defines “an activity of public interest” as providing or ensuring the provision of one or more services of public interest through financing as well as construction, and/or management, and/or maintenance of certain types of sites listed in the Act. The term “service of public interest” is also given a definition – a service in favour of society, the provision of which is usually the responsibility of the public partner.

The PPPA determines the entities which can take part in the public-private partnership – they are public (ministers and heads of departments, municipal mayors, state and municipal public organizations) and private (capital commercial companies). The risks are allocated between the public and the private partner. The site which operates in public interest – subject of the PPP contract – must be insured and the partners cannot transfer it  in favour of third parties.

The Act also regulates the procedure of implementation of PPP, the conclusion and performance of the contract as well as the acts of amending and terminating the contract. Where disputes arise concerning the PPP contracts, the relevant civil court is considered competent. Decisions in the procedures of selecting a private partner may be appealed under the terms of the PPA.

The activities on the planning, accounting and publicity of the PPP are also regulated in the PPPA. The Council of Ministers sets the state policy on PPP through a National Programme and an Operational Plan for the Programming Period 2014-2020, which shall be adopted by June 30, 2013. The Minister of Finance is responsible for keeping and maintaining a public register of PPP, to which free access via the Internet should be provided.

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Decision No 1368 from May 31, 2012 of the Communications Regulation Commission

Decision No 1368 from May 31, 2012 of the Communications Regulation Commission (CRC) was promulgated in the State Gazette, issue 47 of June 22, 2012, in force as from June 22, 2012. With it the CRC stipulated new Rules for carrying out of electronic communications via radio equipment using a radio frequency spectrum which does not need to be individually assigned. This act repealed the previously existing Rules for carrying out of electronic communications for private needs via radio equipment using a radio frequency spectrum which does not need to be individually assigned, which were accepted with Decision of the CRC No 1188 from September 14, 2007.

The new Decision makes significant changes in following three main directions:

1. Electronic communications are divided into two regimes: electronic communications for private needs (Art. 2, Para 1) and public electronic communications (Art. 2, Para 2). Electronic communications for private needs are carried out without restrictions. The carrying out of public electronic communications is under a notification regime – only after filing a notification with the CRC.

2. Additional requirements, related to the protection of people’s life and health. Unlike the previous rules, the new rules contain a separate Section II dedicated to the protection of people’s life and health, protection of the environment and not generating interference while using the radio frequency spectrum. Para 2 of Art. 7 prescribes taking of „…measures to reduce to a minimum the risk of the harmful electromagnetic fields and radiation for the population by deploying the electronic communication devices on places, where the population will be exposed to the least extent to harmful emissions.”

3. Specificity in some cases of carrying out of communications. Electronic communications through radio equipment of electronic communication networks for providing of MCA services onboard of aircrafts and for providing MCV services onboard of vessels, as well as electronic communications through land stations onboard of aircrafts (AES) and onboard of vessels (ESV) are carried out:

- after prior permission from the Minister of Transport, Information Technologies and Communications or an official authorized by him/her for installation and exploitation of the necessary devices onboard of a vehicle – when this vehicle is registered under the jurisdiction of Republic of Bulgaria.

- without prior permission – for all other aircrafts and vessels on the territory of the Republic of Bulgaria. Special rules have been provided in these cases.

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Act for Amendment and Supplement to the Civil Procedure Code

In the State Gazette, issue 49 from June 29, 2012, the Act for Amendment and Supplement to the Civil Procedure Code (CPC) was promulgated.

Some supplements have been made, regarding the fees for inventory.

A new Para 4 in Art. 73, is created concerning the proportional fee for enforcement proceedings – the percent decreases with the increase of the interest, but the fee cannot exceed the maximum amount, determined by the tariff. It is provided that the proportional fee for inventory should be charged upon the lower amount between the price of the inventory object and the monetary claim. According to the new paragraph, the sum of all proportional fees at the expense of the debtor or the claimant in one enforcement proceeding cannot exceed one tenth of the obligation, except where their minimum amount, specified in the tariff, exceeds this limit.

In Art. 79 a new paragraph is created as well. It states that no fee should be collected when an inventory is made within the terms of voluntary execution.

With the new Art. 450a, called “Electronic attachment of a claim in bank account” the legislator grants the opportunity an attachment of a claim from the debtor’s bank account to be enforced by the enforcement officer with electronic message. The message should be signed with electronic signature and sent electronically via “Unified medium for exchange of electronic attachments”. To this end banks and enforcement officers are included in the Unified system. Inclusions and exclusions are made with a one-sided statement to the Minister of Justice. Statements, related to imposition, execution and lifting of the attachment, are also submitted to be kept in the Unified medium.

Some amendments are made in Para 2 of Art. 455 “Enforcement proceeds”. Payment of the amounts, owed to the claimant and the joint creditors, is made within a term of 7 days as of the entry into force of the distribution of the collected amounts or with the expiration of the term under the Tax-Insurance Procedure Code. The payment is made on the basis of payment orders of the private enforcement officer.

Art. 487, Para 2 provides that the announcement for sale has to be published on the web page of the competent District Court.

The Transitional and Final Provisions to the Act for Amendment and Supplement to the Civil Procedure Code state that all the amendments and supplements made with this Act to the Tariff of the State Fees, collected under the Civil Procedure Code and the Tariff of the Fees and Costs under the Private Enforcement Officers Act are to be adopted by the Council of Ministers within a month from the enactment of this Act. Proportional fees, paid in before the enactment of the Act, are not to be restated.

There are some amendments in the Private Enforcement Officers Act, regarding Аrt. 68, Para 1, item 4, where the minimum term for deprivation of legal capacity is changed to one year, instead of three months. Disciplinary responsibility is acquitted no later than three years (two before the amendment) after the violation has been made.

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Decision No 7 of the Constitutional Court of the Republic of Bulgaria on Constitutional Case No 2 from 2012

Decision No 7 from 2012 of the Constitutional Court was promulgated in the State Gazette, issue 49 dated June 29, 2012. The Court was approached by 55 members of the Parliament with the request to declare the unconstitutionality of several provisions of the effective Labour Code (LC). Among them is the new Art. 414a, which stipulates administrative liability for employees or workers when providing their labour without an employment contract – a fine equal to the triple amount of their personal contributions for social and health insurance.

According to the petitioner, the challenged text violates the principle of the state of law, because citizens are sanctioned without having any fault since the employee is the weaker party in an employment relationship, rather than the state, which through its supervisory authorities has to ensure compliance with the labor legislation and to create conditions for the realization of citizens’ right to work.

The Court ruled that Art. 414a of the LC is unconstitutional and it is in conflict with Art. 16 of the Constitution of the Republic of Bulgaria, under which the law protects and guarantees labor, and with Art. 48, Para 1 of the Constitution, which provides that citizens have the right to work, and the State shall take care of creating the conditions for the realization of this right. The main motive of the Court is related to the fact that the provision of labor, without the conclusion of an employment contract is a behavior that benefits only the employer, as far as he/she "saves" on the payment of contributions for state social and health insurance, compensations under labor relations, the provision of paid annual leave, etc., and has the opportunity to terminate the employment relationship with such employees and workers without complying with the law. On the other hand, according to the Court it cannot be argued that an employee who performs work without having signed an employment contract is in the usual sense motivated to do so by their own profit. On the contrary, they are in a situation of legal uncertainty and cannot claim remuneration, the time of their employment is not considered as length of service, etc.

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