Bulgaria amends its Emergency Measures Act

Bulgaria

Bulgarian lawmakers have suggested amendments to the Emergency Measures Act adopted just two weeks ago in Bulgaria. (For details on the original Emergency Measures Act, see: Bulgaria: state of emergency legislation published today).

The amendments are contained in the Act for Amendment and Supplement of the Emergency Measures Act, published in the State Gazette on 9 April 2020 and, with one exception, are effective from the same date. The reasons behind most of the new legislative proposals are the need to clarify existing provisions and address complaints received from the business community on some measures.

The amendments to the Emergency Measures Act include the following:

Changes to terms and opportunity for remote court hearings

The Act narrows down the scope of procedural terms subject to suspension to only those provided to the parties within the respective proceedings. In other words, terms applicable to the work of the administrative bodies and the court will continue.

In addition, litigation proceedings excluded from the scope of the general stay are now explicitly listed in the Act. These include criminal proceedings, proceedings related to security of a future claim, imposition of interim measures, proceedings related to the suspension of the preliminary execution and challenging of certain administrative acts such as tax assessment notices, and other urgent proceedings. It should be noted that all criminal and administrative proceedings related to the violation of these measures during the state of emergency will not be suspended. This amendment will enter into force on 16 April 2020.

What is new is that the Act now stipulates the opportunity for conducting remote open hearings by the court and by the Commission for Protection of Competition, for which the parties will be notified in advance. Each party will be provided with the opportunity to attend the hearing virtually. Minutes for the remote open hearing will be prepared immediately and provided to the parties in case of objections.

Limitation of the adverse consequences from delay under loans

After wide public debate, the Act limits the scope of the original provision, which permits any party to delay the performance of its payment obligations for the duration of the state of emergency, to payment delays under loans provided by banks and financial institutions. It is now clear that only borrowers would be exempt from the adverse consequences of their delay, such as default interest and penalties, or a creditor’s rights to accelerate or terminate a loan.

Other forms of financing, such as factoring, forfeiting, and financial leasing agreements also fall within the scope of this rule.  The limitation on adverse effects will be applied even if the financing has been transferred to another bank, financial institution or a third party.

Changes to compensation for employers

According to the Emergency Measures Act, the state will provide 60% compensation for eligible employers that have been affected by emergency measures, whereas the compensation will be calculated based on the socially insured income of the respective employee for January 2020. Following the amendments, the state has also undertaken to cover 60% of the social-insurance payments due on behalf of employers. This measure was implemented after complaints from businesses that despite the compensation, the economic burden for employers remains onerous due to the necessity to pay social-insurance contributions for their employees. For more information on compensation for employers, please seeBulgarian Government adopts wage subsidies to support business during crisis.

No rent due for certain real estate

The Act further provides that tenants of state or municipal real estate may be released from rent payment or their rent may be reduced by the competent authorities if their business has been affected by the anti-coronavirus measures. This opportunity will apply for both companies and individuals. The rent reduction or rent exemption payment will be granted with an explicit decision from the competent authority. Some municipalities have already released their tenants from the obligation to pay rent for March.

No extension of terms for public procurement and concession award procedures

The Act provides that there will be no suspensions of court proceedings under the Public Procurement Act, the Concessions Act and the Management of Resources from the European Structural and Investment Funds Act due to the state of emergency. In addition, the original text of the Emergency Measures Act provided that certain terms for performance of obligations may be extended with one month as of the end of the state of emergency. Following the amendments, it is explicitly stated that this opportunity will not apply to public procurement or concessions award procedures. Thus, no extension of terms will be granted in such procedures.

This rule was adopted after numerous legislative proposals, which ranged from no action at all to suspension of all procedures or suspension solely of appeal procedures under public procurement procedures. The discussed change is a clear step towards a more comprehensive regime.

Return of payments made for cancelled trips

Tour operators who need to reimburse payments made for trips, which have been cancelled as a result of the declaration of the state of emergency could offer vouchers to their clients instead. If clients do not accept the vouchers and the parties fail to reach an agreement on replacement tourist packages, tour operators must reimburse all payments made by or on behalf of their clients within one month after the end of the state of emergency.

Preliminary execution of the orders of the Health Minister

Following numerous appeals of the orders of the Health Minister that impose various measures for overcoming the coronavirus crisis, which include the mandatory wearing of masks to prohibitions on visiting shopping malls, parliament decided that the orders of the Health Minister will have preliminary execution. This means, even if an appeal is filed, the performance of the order will not be suspended.

For more information on the amendments to the Emergency Measures Act, contact your regular CMS advisor or local CMS experts: