The Bulgarian court verifies of its own motion whether it is competent to hear and adjudicate any legal dispute brought to it, including a dispute with an international element. It is the nature of the dispute rather than the choice of the parties that will determine the international jurisdiction of Bulgarian courts. The parties cannot request a Bulgarian court to rule on a dispute relating to property rights if neither the parties nor the challenged right have any relationship to Bulgaria and even if the Bulgarian court accepts to hear such a case, the judgment on the dispute will be null and void.
The international jurisdiction of Bulgarian courts is regulated in Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (“the Regulation”) with regard to disputes related to EU Member States and in the Private International Law Code (PILC) in all other cases.
The scope of the PILC covers a wide range of legal relations: personality rights, marriage and matrimonial claims, court cases of parentage, adoption, maintenance, succession, intellectual property rights, labour disputes, disputes relating to rights in rem, contractual relations, tort, security for claim, and enforcement. Some of these legal relations are explicitly excluded from the scope of the Regulation, i.e. the civil status and rights in property arising out of a matrimonial or comparable relationship, maintenance and succession. The Regulation does not apply to insolvency proceedings, social security and arbitration either. This paper focuses on the jurisdiction over contract-related disputes and compensatory damages.
In accordance with the Regulation, the rule of jurisdiction of Bulgarian courts is that persons domiciled in Bulgaria, regardless of their citizenship, are sued in Bulgarian courts. Persons who are not nationals of Bulgaria but are domiciled in Bulgaria are governed by the rules of jurisdiction under the Bulgarian laws.
A person domiciled in another Member State may be sued in Bulgaria, while observing the provisions of the Regulation on the special and exclusive jurisdiction. If the parties are domiciled in EU Member States and they have agreed that a Bulgarian court will have jurisdiction to settle disputes which have arisen or which may arise in connection with a particular legal relationship, that court will have exclusive jurisdiction. The jurisdiction conferred in this way is subject to examination by the court seized whether the jurisdiction clause was in fact the subject of consensus between the parties and whether this consensus was clearly and precisely demonstrated (Judgment of 28 June 2017, Georgios Leventis and Nikolaos Vafeias – Malcon Navigation Co. Ltd and Brave Bulk Transport Ltd, Case C 436/16). The agreement on the conferral of jurisdiction may be also oral if evidenced in writing.!
In a situation in which a jurisdiction clause is stipulated in the general conditions, such a clause is lawful only where the text of the contract signed by both parties itself contains an express reference to general conditions which include a jurisdiction clause (Judgment of 7 July 2016, Hőszig, Case C 222/15).
A person domiciled in another EU Member State may be sued in Bulgaria in connection with contractual obligations where the place of performance of the obligation is within the territory of Bulgaria.
Unless otherwise agreed, the place of performance of the obligation is, in the case of the sale of goods or the provision of services, the place in a Member State where, under the contract, the goods were delivered/the services were provided or the goods should have been delivered/the services should have been provided.
However, it should be examined in each particular case whether the contract falls into the category of sale of goods or provision of services, judging by the subject-matter of the contract, i.e. whether it involves supply of goods or performance of a certain activity for consideration. For instance, with regard to distribution agreements, the Court of Justice considers that, for the purpose of determining the jurisdiction, an exclusive or quasi-exclusive distribution agreement falls into the category of contracts for provision of services (Judgment of 19 December 2013, Corman – Collins, Case C 9/12).
Jurisdiction will be conferred on the Bulgarian court in accordance with the Regulation where the parties to a contract for provision of services are domiciled in different Member States and the services are provided at several places but primarily within the territory of Bulgaria.
The Bulgarian court will also have jurisdiction over a dispute concerning a contract for provision of services where the place of main provision of the services cannot be determined provided that the service supplier is domiciled in the country (Judgment of 8 March 2018, Saey Home & Garden NV/SA/Lusavouga-Máquinas e Acessórios Industriais SA, Case C 64/17; Judgment of 11 March 2010, Wood Floor Solutions Andreas Domberger, Case C 19/09).
It is interesting to see also whether the rule for the determination of jurisdiction in cases of contractual claims would apply also to a recourse claim of a joint debtor under a credit agreement to the others. The Court of Justice answers in the affirmative by first defining the credit agreement between a credit institution and two joint debtors as a contract for the provision of services and then stating that place of provision of the service is where the credit institution has its registered office. Hence the court has jurisdiction to examine also the recourse claim of one of the joint debtors to the other (Judgment of 15 June 2017, Saale Kareda/Stefan Benkö, case C-249/16). The Bulgarian court will have jurisdiction to rule also on damages claimed in relation to tort in case the place where the harmful event occurred or may occur is within the territory of Bulgaria even ! where the defendant is domiciled in another Member State.
The expression “place where the harmful event occurred or may occur” is interpreted by the Court of Justice as intended to cover both the place where the damage occurred and the place of the event giving rise to it (Judgment of 25 October 2011, eDate Advertising and Others, Cases C-509/09 and C-161/10).
In the cases of an action for damages due to a defamatory publication, action may be brought before the courts of each Member State in which the publication was distributed but each court will have jurisdiction to rule solely in respect of the harm caused in the state of the court seized (Judgment of 7 March 1995, Shevill and Others, Case C-68/93).
Where damages are claimed for infringed personality rights of a natural person as a result of publications on a website, the Court of Justice accepts that the natural person has the right to bring an action for liability, in respect of all the damage caused, before the courts of the Member State in which the centre of his interests is based (Judgment of 25 October 2011, eDate Advertising and Others, Cases C-509/09 and C-161/10) since it reflects best the place where the damage was caused by the publication on the Internet and the relevant courts could best assess the type, nature and value of damages.
The centre of interests of natural persons corresponds to their habitual residence but it could also be elsewhere in case the natural person has a particularly close link to another Member State (e.g. because of the pursuit of a professional activity) that becomes the centre of interests.
The centre of interests of legal persons is determined in a similar way. In its Judgment of 17 October 2017, Bolagsupplysningen OÜ, Ingrid Ilsjan/Svensk Handel AB, Case C-194/16, the Court of Justice examined a request for a preliminary ruling concerning non-material damage caused to a legal person.
For the sake of comparison, non-material damage is defined in Bulgaria as pain and suffering sustained by the victim and it is settled case-law to reject the right to compensation for such damage caused to legal persons. It is for the first time that the Supreme Court of Cassation issued a ruling in Civil Case No 6155/2013, examining the admissibility of a claim filed by a legal person for compensation of non-material damage caused by an article published by the defendant, in which the court ruled also on the right of legal persons to seek compensation for non-material damage. The court assumed that such a claim was admissible since the liability for tort does not make a distinction between natural and legal persons and pointed out the need for updating the case law of the enforcement of the legislation concerning the scope of non-material damage.
The judgment of the Court of Justice referred to proceedings in which compensation was claimed for non-material damage caused by the publication of information and comments on a professional site managed in the Member State in which the relevant legal person carried out the main part of its activities and they were, bearing in mind the language in which they were written, intended, for the most part, to be understood by people living in that Member State.
It is accepted that the centre of interests of a legal person reflects the place where its commercial reputation is the greatest and hence that centre has to be determined, depending on the place where the legal person carries out the main part of its activities. The centre of interests of a legal person may coincide with the place of its registered office in accordance with its articles of association when it carries out all or the main part of its activities in the Member State in which that office is situated and the reputation that it enjoys there is consequently greater than in any other Member State.
When the relevant legal person carries out the main part of its activities in a Member State other than the one in which the registered office is located, it is necessary to assume that its commercial reputation is greater in that Member State than in any other and that, consequently, any injury to that reputation would be felt most keenly there. To that extent, the courts of that Member State are best placed to assess the existence and the potential scope of that alleged injury and to determine the relevant compensation.
Where the claimant is established in Bulgaria and the defendant does not have habitual residence in a Member State, it is the PILC rather than the Regulation that will be applicable.
Bulgarian courts have jurisdiction, in accordance with the PILC, in any of the following cases: the claimant is a Bulgarian national or a legal person registered in Bulgaria; claims are filed against a defendant whose habitual residence, registered office in accordance with its articles of association or location of its head office is in Bulgaria.
Bulgarian courts also have jurisdiction to examine a claim filed against a legal person due to a dispute arising out of direct relationships of a branch of that legal person provided that the branch is registered in Bulgaria.
As to disputes arising out of contractual relationships or tort, the jurisdiction of Bulgarian courts is regulated in the Code similarly to the Regulation.
Bulgarian courts have jurisdiction over disputes arising out of contractual relationships also in cases in which these conditions are not fulfilled by the place of fulfillment of the obligation is in Bulgaria or the defendant carries out the main part of his activities in Bulgaria.
With regard to tort, Bulgarian courts have jurisdiction over claims of damages due to tort in the above mentioned cases, as well as where the harmful act was committed in Bulgaria or the damage or any part thereof occurred in Bulgaria. There is an explicit provision that this jurisdiction applies also to direct claims filed by the affected person against the insurer of the liable person.
The principles and enforcement rules of the Code and the Regulation are identical, safeguarding the equal treatment of the parties in proceedings concerning disputes with an international element.
Author: Gergana Ilieva, Attorney-in-Law, Dobrev & Lyutskanov Law Firm