Dobrev & Lyutskanov: The Most Significant Amendments to the Act on the Measures and Actions During the State of Emergency

Preliminary execution of the act for imposing measures and restrictions during the state of emergency

The orders of the Minister of Health for imposing measures and restrictions with regard to the state of emergency are to be executed preliminary by law. There is no explicit prohibition for court control over the preliminary execution allowed by the law, therefore the execution can be suspended by the court on request of a party contesting the administrative act.

Lower amounts of the sanctions for non-observance of the epidemic-control measures

The previous amount of the fine of BGN 5,000 for violating or non-observing the measures for epidemic control during a state of epidemic emergency is replaced by a sanction within the range between BGN 300 and BGN 1,000, and in case the violation is repeated – a sanction within the range between BGN 1,000 and BGN 2,000.

The amount of property sanctions for sole traders and juridical persons, who violate the epidemic control measures, is also reduced. The previous amount of BGN 15,000 is replaced by a sanction between BGN 500 and BGN 2,000, and for repeated violation the amount is between BGN 2,000 and BGN 5,000.

No retroactive effect is provided for this changed legal sanction norm for the cases of violations for the time the previous law was in effect, but where the penal acts have not entered into force the authority determining the sanction must apply the law, which is most beneficial for the perpetrator – the one providing for the lightest sanction.

Cancelling the consequences of delay of payment

The broadest circle of private law subjects are affected by the amendments to the Act concerning the exclusions from the consequences (provided for by the contract and/or by the law) in case of delay of payment concerning a monetary obligation.

Prior to the amendments to the Act on the Measures and Actions, the provision stated that until the state of emergency is cancelled the consequences of delay of payment of persons of private law shall not arise, including interest and late payment penalties, as well as non-monetary consequences – such as acceleration clauses, contract termination and seizing of movable property.

After the amendments the effects of delay of payment shall not apply only to debtors – subjects of private law, for obligations under credit contracts and other forms of financing (factoring, forfeiting, etc.), provided by banks and financial institutions, including when the receivables have been acquired by other banks, financial institutions or third parties, as well as lease contracts. Under such contracts no interest and no late payment penalties can be charged, no acceleration clauses can be applied and the contract cannot be rescinded due to breach, as well as items cannot be seized.

The amendments to the Act are related to the Guidelines on legislative and non-legislative moratoria on loan repayments applied in the light of the COVID-19 crisis, adopted by the European banking authority. The provision is applicable for all credit contracts and for all debtors – subjects of private law. It will be applied by the banks and financial institutions by renegotiating contracts and extending terms with the duration of the state of emergency. The extension of terms should be reflected by the amount of the remuneration interest due to the bank though and as a result – lead to increase of the amount of monthly payments. Defining the exact parameters for applying the measure is a question of individual approach – whether only the principal of the debt shall be paid, or interest, or both. The judgment of banks for each case shall be related also to the data available in each credit file. The Act does not provide for grounds for cancellation of the debt with maturity during the state of emergency, but only to postpone its maturity for the future.

After the amendments to the Act on the Measures and Actions, interest and late payment penalties are due for cases of breach of monetary obligations of subjects of private law, which come to maturity during the state of emergency. The amendment of the Act enters into effect as of the date of its promulgation, therefore interest and late payment penalties cannot be charged for the transition period from the date of declaring the state of emergency until the date of coming into force of the amendment.

Interest for delayed payment shall be charged also for monthly obligations for electricity, heating and water, as well as payments towards mobile service providers. Service providers shall also have the right to suspend their services under the terms of their contracts in case of non-payment for the respective reporting period.

The non-payment of monetary obligations can also be a ground for rescission due to breach of contract, as well as termination of the contract, when such an option is explicitly provided for.

Even if the above indicated effects of delayed payment should arise, the subjects which can invoke them cannot rely on timely court protection of their rights until the state of emergency is cancelled. The only type of court proceedings, which is applicable for defense of such rights, is the future claim security. Within its framework claim security measures can be imposed over property of the debtor only if the latter is a juridical person, the claim is probably justified, there is a need for claim security and the measure requested is suitable. Only in the proceedings on the case, which shall be opened after the state of emergency is cancelled, the merits of the case shall have to be proved and respectively the most likely objections of the other party for the state of emergency as a force majeure and the resulting exculpation for the breach of law shall have to be rebutted.

Concerning the scheme for compensation 60/40 the state shall pay also the social security contributions due by the employer

With one of the most significant amendments to the Act the support for employers provided by the state is being extended with goal of protecting employment and avoiding collective redundancies, which are under a very strict regime – this topic is dicussed in detail in this article. Therefore 60% of the amount of the social security income of the employee for the month of January 2020 shall be paid by the funds of the National Social Security Institute along with the respective social security contributions due by the employer.

The provision concerns employers who meet the requirements to receive the compensation under decree No 55 from 30.03.2020. Before the funds can be released under the scheme a clear answer is still required whether the state will cover the social security contributions due by the employer as calculated over the full amount of the social security income or only over the part paid by the employer.

Longer terms for contracts for short-term seasonal agricultural employment

An additional provision of the Act allows the conclusion of short-term seasonal agricultural employment for more than one day, as provided by the principle rule of the Labour Code, for the duration of the state of emergency. For the duration of the state of emergency registered tobacco growers can also benefit from this type of contract. The principle rule that the employment under such a contract is not acknowledged as time served under employment for social security and employment purposes.

Wider range and higher amount of the property which cannot be seized under the Tax and Social Security Procedural Code

After the amendments to the Act on the Measures and Actions, the enforcement of public obligations cannot be enacted via seizure not only of employment remuneration, employment compensation, pension or scholarship payments, but also of any other remuneration for work. The monthly threshold of 250 BGN has been replaced by the minimum monthly work wage for the total sum of all receivables.

Vouchers for cancelled tourist trips

A new provision in the Act provides for a right for travel agents, who are obliged to refund the sums paid by a tourist for a trip, cancelled due to the state of emergency, to offer a voucher for the same amount to the tourist. If the tourist does not accept the voucher and there is no other agreement concerning a trip package – substitute between the travel agency and the tourist, the travel agent shall refund all sums received by the tourist or on his behalf no later than one month after the state of emergency is cancelled.

Terms, which are suspended

For the period from 13 March 2020 until the state of emergency is cancelled all procedural terms on court, arbitration and enforcement proceedings are suspended.

Excluded from this rule are the proceedings and cases explicitly listed in an Appendix to the Act. One of the most significant supplementations is the inclusion in this list of the cases for unlawful actions of the administrative authorities, for contesting public debts, as well as for contesting the administrative acts, issued for or with regard to the state of emergency. The cases listed in the appendix are almost identical to the one listed in the decision of the court division of the Supreme Judicial Council, which defined the cases which can proceed for the duration of the state of emergency. The list of cases also includes such related to administrative proceedings, for which the Act provides extension of terms. This is the reason which required a legislative measure to guarantee the right of action and of access to court.

Except procedural terms, limitation terms are also suspended, where their expiry bars the exercise of rights by subjects of private law, respectively where rights are acquired. In the scope of the provision fall such terms as the term for acquiring property via possession and for time-barring the right to build under the Property Act. Here also fall the terms for time-barring receivables under contractual and non-contractual obligations, provided for by the Law on Obligations and Contracts, as well as the time-barring terms in the Labour Code.

From the initial version of the Act are excluded the terms, which terminate the rights of subjects of private law, with the exception of terms under the Law on Administrative Violations and Sanctions and the Penal Code. The text, which provided suspension of the terms to perform instructions, given by the administrative authorities to the parties and participants in the proceedings, has also been revoked. These terms shall continue to expire.

After the amendments to the provision for suspension of limitation terms a clear delineation appears between private law relations, where the terms are suspended without exclusion, and administrative, administrative-penal and penal proceedings, where terms continue to expire.

The terms, both procedural and limitation, which are suspended after the declaring of the state of emergency from 13 March 2020, shall continue to expire as of 7 days after the Act is promulgated in the State Gazette. The actions performed from the date the state of emergency is declared until the entry into force of the amendments to the Act keep their effect.

Terms, which are extended

The amendments to the Act on the Measures and Actions in this part create exclusions from the already introduced text for extending the terms with one month as of the moment the state of emergency is cancelled.

This rule applies for all terms defined by the law (outside the terms regulated by the suspension provision), which expire during the state of emergency and are related to exercising rights or performance of obligations. as well as to effects of administrative acts, which are limited by time and expire during the state of emergency.

An exclusion from the rule is provided for terms, expiring during the state of emergency and related to proceedings for assigning public procurements, concession procedures, proceedings under the Act on Management of Funds from the European Structure and Investment Funds, proceedings for expropriation of private real estate for state, respectively municipal needs, regulated by the Law on State Property and the Law on Municipal Property, the proceedings under the Law on Supporting Agricultural Producers, the Law for Ownership and Use of Agricultural Lands, the Law on Forests, the Law for Application of the Common Organisation Of Agricultural Markets in the |European Union, the Law on Spatial Planning and the proceedings under the Law on Protection of Competition. The terms provided for by regulatory normative acts, issued on basis of the listed acts.

The amendments to Act in this part aim at guaranteeing the timely development and conclusion of administrative proceedings, set in special laws and directly related to the management of public funds, as well as such regulated in public interest.

Remote sessions and hearings

After the amendments to the Act on the Measures and Actions until the state of emergency is cancelled, municipal councils, whose activity is obstructed due to restrictions for adopting decision in absence of the council members, can hold sessions remotely via direct and virtual presence while observing the requirements for quorum and personal vote, or to adopt decisions in absence. Except to municipal councils, this right is also granted to state and local authorities, councils, committees, commissions, including fund management and fund control authorities and other, who are not juridical persons. The same possibility is provided for holding open court hearings during the state of emergency, as well as hearings before the Commission for Protection of Competition.

Partial payment or exception from the obligation to pay installments for lease or use of state and municipal property

Natural and juridical persons – lessors or users, who have limited or concluded their activity due to the measures and restrictions imposed for the duration of the state of emergency can be allowed, in accordance with an act of the authority granting the lease or right to use the property, to pay partially or be freed completely from the obligation to pay installments for lease or for use.

Free provision of wartime stores, medical equipment, protection devices and hygienic materials

The amendments provide the opportunity to free wartime stock from the State reserve for free to meet the needs of the population, as well as to provide hospital and utility property and other reusable property for free use for the duration of the state of emergency.

An option is included to provide movable items – medical equipment for temporary free use by healthcare institutions, as well as to transfer consumables – personal protection devices, disinfectants, hygienic materials – for free.

The Act enters into effect as of the day of its promulgation – 9 April 2020, with the exclusion of the provision concerning terms in administrative proceedings, which are not considered extended and shall have to be observed by subjects of private law. The latter enters into effect within 7 days from the promulgation of the law. As per the rule of the Law on Normative Acts, the day on which this provision enters into effect is 17 April 2020, since the normative act enters into effect in a term set as from the date of its promulgation, whereas the day of promulgation is not counted in the term and term expires on the last day at 24.00 o’clock.

The goal of the legislator with the used technique to postpone the entry in force of the Act is to guarantee the right of the parties in on-going administrative proceedings, as well as of the interested parties, to take the respective actions for defense of their rights and lawful interests. The current statement provides an overall analysis of the most significant amendments from 9 April 2020 to the Measures and Actions during the State of Emergency Declared with a Decision of the National Assembly from 13 March 2020 Act. We present below the most significant amendments in this Ac