Pre-litigation measures generally refer to the steps parties can take prior to initiating formal legal proceedings before courts of law to prepare for the actual court process or resolve the dispute out-of-court. Pre- litigation differs substantially under common law and civil law. The Bulgarian civil law legal system does not recognize pre- litigation as a formal process, however the Civil Procedures Code provides for certain actions that may to be undertaken by the parties in a future litigation either to prevent the dissipation of assets or the deterioration of circumstances that could negatively impact the outcome of the case or to prevent the collection of evidence relevent to the dispute.
1. Interim Measures Securing Future Claims
Interim measures play a vital role in the Bulgarian civil law legal system, ensuring the effective administration of justice and protection of rights and interests until the final resolution of legal disputes. Securing of the claim is permitted for all types of claims. An application for interim measures may be made by the plaintiff during the pendency of the court process as well as prior to the filing of a statement of claim – the so called “security of future claim”.
Тhe application for security of future claim shall be submitted to the court at the plaintiff’s permanent address for natural persons/ registered seat for entities or where the property that will serve as security is located. In case the plaintiff is a foreign natural or legal person, the application should be filed with Sofia City Court. The proceedings are one-sided with the participation of the plaintiff only as the main purposes of the proceedings are speed and surprise of the defendant.
The court should rule on the application for interim measures on the same day it is submitted. However, it is very likely that in practice a court, especially a very busy one, will delay the issuance of the ruling longer than the statutory term. The imposed interim measure shall be adequate to the future dispute, such as attachment of immovable property or movable assets and receivables of the debtor, including attachments of bank accounts, shares in a company, as well as any other measures that the court determines as appropriate, i.e. suspension of a motor vehicle registration, stay of enforcement.
The court may require the plaintiff to provide a guarantee, typically a monetary one amounting to 10% to 15% of the claim to secure potential damages to the defendant in case the claim is dismissed. The court retains the discretion to demand this guarantee, even if the interim relief request is supported by ample written evidence. The court shall set out a time limit for submission of the claim, which cannot be longer than one month. The interim measure shall be imposed forthwith by the bailiff at the request of the plaintiff based on the court’s order as well as by the Real Estate Registry in the event of attachment of immovable property. At this stage the future defendant (the person against whom the interim measures have been granted) will be notified officially therefor and may appeal the court ruling.
2. Registration of Court Claim related to Immovable Property
Under Bulgarian law certain claims related to immovable properties’ rights shall be registered at the Real Estate Registry prior to the commencement of the court proceedings. Such registration resembles a proprietary injunction (i.e. granted to preserve the subject matter of a claim where the applicant has a proprietary claim). Although similar to the attachment of real estate assets as a security of future claim in terms of some of its legal consequences, claim’s registration differs substantially because it is not contingent to the plaintiff’s will but mandatory as a prerequisite for the valid processing of the claim.
All claims seeking the annulment, destruction, annulment or recognition of the nullity of acts subject to registration, such as notary deeds for transfer of property (sale, donation, swap, etc.), acts of establishment, transfer, amendment or termination of another real estate right (e.g. superficies rights) and acts recognizing such rights, as well as claims for court partitioning and for declaring as final of a preliminary contract for transfer of real estate rights shall be registered upon the initiative of the plaintiff. The main purpose is to publicize the litigation, and when explicitly provided for in a law – to create an effect of opposability against third parties with competing rights regarding the disputed property.
The claim’s registration allows the plaintiff to oppose his rights to a third party, the acquirer of the property during the pending legal proceedings, in view of the extension of the force of res judicata of the court decision rendered on the registered claim to him as well. In case of transfer of the claimed property after the claim’s registration, the process may continue between the initial parties, and this will not vitiate the court decision. However, the acquirer may step in the proceedings but cannot claim acquisition of the property by prescription, trying to neutralize the effect of the registration of the claim.
The final court decisions made on registered claims shall also be registered not later than 6 months after their entry into force. Otherwise, the effect of the claim’s registration against third parties will be annulled.
3. Pre- Collection of Evidence
In any dispute resolution process evidence is a key factor. Some of the most important evidences are collected during the litigation phase upon requests of the parties after being allowed by the presiding judge. Sometimes it is urgent to collect evidence prior to commencing the court case as such evidence may be lost or destructed or its collection would become more difficult or impossible in the future.
The Civil Procedures Code provides for a special pre- collection of evidence procedure, also referred as “security of evidence”. In principle, all means of evidence can be secured, since a need for security may arise in relation to all of them. The security of evidence is intended to prevent the possibility that because of the bad faith behavior of the opposing party or of the action of objective factors, a means of evidence will be lost or destroyed, or its collection will be hindered.
The application for security of evidence shall be filed with the regional court at the permanent address of the witness/expert to be questioned or at the location of the property to be inspected. The local competency of the court (as close as possible to the evidence to be collected) relates directly to the purpose of evidence security – the proceedings speed due to the danger of losing the evidence or making its collection difficult/ impossible. As a preliminary phase of the upcoming claim process, pre- collection represents adversarial proceedings with the active participation of the future opposing party.
The law explicitly lists only oral evidence and that related to the inspection of real estate, but all means of evidence admissible under the Civil Procedures Code may be secured, because the need for pre- collection may arise in relation to all of them. In practice, mostly technical expert reports and witness testimonies are secured. Documents in possession of the other party will rather be collected in the litigation phase: upon request of either party the judge shall oblige the other party or a third party to present to court certain documents relevant to the dispute. In case of non-compliance the judge will consider the facts to be proven with the respected not presented document to the detriment of the respective party.
Worth noting the security of evidence is designed with respect to the collection of a specific evidence and cannot be used by the parties for clarification of circumstances that may possibly be the subject of allegations by the future participant in the trial.
When considered necessary Law Firm Mikov & Attorneys takes proactive measures by initiating interim relief or evidence collection proceedings prior to commencing litigation in Bulgaria. This strategic approach aims to protecting our clients from potential asset disposals initiated by the opposing party and from potential lost or destruction of evidence relevant to the dispute.
