The Arbitration procedure in Bulgaria has its legal definition in the Act for International Trade Arbitrage. This act of legislation included also hearing legal disputes between local parties and legal disputes between traders and consumers. It is important to point that the arbitration courts in Bulgaria have no precise regulation of their formation and practice. These civil tribunals are not supervised either regulated by any governmental or state Authority. Their acts of justice cannot be appealed on a higher instance, in comparison to the decisions by the regular civil courts. The figures of arbitrators in Bulgaria also are not regulated by any council, governmental or private Authority.
In addition, there are no rules or provisions for becoming and practicing as Arbiter in Bulgaria. So any person with a Law degree can become an Arbiter, or form a judicial entity, named “arbitration court”. Where to hear and decide on civil lawsuits, brought to them and to issue decisions that bind the participants. As long as parties have voluntary agreed via a clause in their contracts that “any legal disputes will be heard by the following Arbitrator/ Arbitration court: ”.
In addition, there is a defective procedure in the arbitration that affected many participants in arbitration lawsuits through the last years. As Arbiters and Arbitration tribunals are not part of the court system, they don’t use the court deliverers of summons. But use the services of private postal couriers to deliver documents and notifications to parties. Where the notification differs: The court employee who serves documents notifies people about the actual content. This puts in danger the proper summoning of the defendant on arbitration lawsuit. Also, it affected the proper notifying about the actual content of the documentation. For example, some people do not reside all-day-long and all the time on their home address. So very often the defendant had no idea that they have been summoned on an arbitration lawsuit against them. And the claimant may use this opportunity to pretend more money than he has the legal right to. Presuming that no one will then object the prospective decision.
And here comes the role of the so-called “independent” Arbitrator. He has received their arbitration fee by the claimant (usually a trader), to decide in fair justice on the arbitration case (where the defendant was usually a consumer). But the sad reality is that arbitrators may not follow the obligatory court practice of the Supreme Court. And parties cannot appeal their decisions. Arbitrators may reduce the amount of the claim, without awarding the defendant with the respective part of the expenses. And you can't do anything against it. Through the last several years many defendants-consumers faced arbitration awards with extremely high sums awarded in favor of the claimants-traders, with no legal reason.
The other circumstance that created a basis for the performance of fraudulent activities: On the basis of the above arbitration decision, the judgment creditor can refer then to the Sofia City court. This is the body of a court which issues writs of execution on the base of Arbitration court decisions. I have made a check at the practice of the City court. It turned that on several hundred applications lodged by one local quick-cash lending company, for obtaining a writ of execution on the base of arbitration award, the so-called independent Arbiter has issued certificate to the City court on every arbitration case, stating that “the defendant has been properly notified about the initiating the lawsuit and about the issuing arbitration decision”. Even in cases where the defendant has not been notified properly and had no idea about the arbitration procedure against them.
Fortunately, at least half of the judges who decided on these applications for writ of execution have rejected these applications. Their correct motive was that the defendant hasn’t been notified properly. And on appeals at the Appellate court, the higher instance judges have confirmed the rejection of these applications. Unfortunately, there are many cases where judges have approved such applications and have issued writs of execution. Of course, there is the legal path to appeal arbitration decision for which you were not aware of, at the Supreme Court. You have to lodge the appeal in 3-months deadline after you realize there has been an arbitration procedure against you.
Ok, If you are the arbiter and you issue such certificate once or twice, and the court rejects the application it could be a mistake. But if you do it hundred times for several years on similar or identic lawsuits while the courts are rejecting applications based on this certificate consisting of untrue information about notification of parties, this leads to a conclusion about the improper legal practice by particular Arbiters in favor of judgment creditors.
For the last several years the outcome of defective and illegal arbitration decisions on claims initiated by a trading entity against a consumer, for which he/she has not been notified properly at all, was in favor of the trader in 99% of the cases. In the form of fully confirmed claim, fully confirmed expenses and fees pretended by the claimant. This created a good amount of money which the trader pursued then from the consumer via the bailiff.
In my lawyer's practice, I had this arbitration case which ended unfortunately just before the latest changes in the legislation. I have appealed to the Supreme court an arbitration decision, issued after improper notification procedure, within the three moths deadline, and have won the appeal. Just to face the return of the lawsuit back to the same Arbitration court for deciding again on the arbitration lawsuit, unfortunately. The same arbitration court, of course, decided again in favor of the claimant. Without even awarding the defendant with expenses, although the arbitrator has rejected ¼ of the amount of the claim.
Couple months ago, the Parliament has finally accepted one very important change that affects the above defective acts of justice by arbiters. From now one, any legal disputes between traders and consumers will not be a subject of arbitration lawsuit anymore. So far, in 100% of the cases namely traders initiated it against consumers. So this legislative change will finally reduce the danger of fraudulent activities by various arbiters and arbitration courts. Consumers may finally find a relief from the danger to face defective and illegal arbitration decision against them.
But still, the process of ineffective notifications of parties of an arbitration lawsuit remains. Therefore I would suggest another change in the related legislation. As detailed above, the local civil court assists for issuing execution list. So in the same way, the same court could assist for the notification procedure as well. Where the claimant could deposit a fee for it together with their claim. This will ensure that in all cases the defendant will be properly notified about the pending litigation lawsuit against them. And will the chance to organize properly their legal defense. So such eventual change would effectively prevent many frauds in the future.