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Obligatory Mediation in Civil and Commercial Court Proceedings

Obligatory Mediation in Civil and Commercial Court Proceedings

Bulgaria
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Under the current legislation, mediation as an alternative method of dispute resolution is voluntary. The amendments adopted in the State Gazette, No. 11 of 2023, which enter into force on 1 July 2024, introduced two categories of obligatory mediation in civil and commercial court proceedings:

  • Obligatory court mediation in cases explicitly listed in the Civil Procedural Code (CPC);
  • Obligatory mediation at the discretion of the court.

The new rules for obligatory mediation enter into force on 1 July 2024.

  1. Obligatory mediation in court cases explicitly listed in the CPC.

The court shall oblige the parties to participate in a mediation procedure in case of pending court proceedings with a subject explicitly listed in Article 140a, paragraph 1 of the CPC.  Mediation is mandatory in the following types of cases:

  • apportionment of the use of a co-owned thing under the Ownership Act;
  • monetary receivables arising from co-ownership under the Ownership Act;
  • partition proceedings under the Ownership Act;
  • certain cases under the Condominium Ownership Management Act;
  • full payment of the share value upon termination of the participation in a limited liability company under the Commerce Act;
  • liability of a managing director or controller of a limited liability company for damages caused to the company under the Commerce Act;

In the abovementioned cases, the court does not make its own assessment of whether the cases are appropriate for mediation, but the court is bound by the nature of the claims.  The court shall check only for the negative preconditions under Art. 140a, para. 4, items 1-6 CPC, which set out the general exceptions in which a mediation procedure cannot be carried out (e.g. the defendant admits the claim, the state is a party to the case, there is convincing evidence of violence committed by one party of the other, etc.).

  1. Mediation at the discretion of the court.

Apart from the cases under item 1 above, the court has the discretion, if it considers appropriate, to oblige the parties to participate in a mediation procedure in the following type of cases:

  • pecuniary or non-pecuniary claim arising from a contract, tort or delict, unjust enrichment, or managing the affairs of another person without due authority where the cost of action does not exceed BGN 25,000;
  • existence, termination, annulment, or rescission of a contract or for the conclusion of a final contract where the cost of action does not exceed BGN 25,000;
  • remuneration or compensation arising from an employment relationship, as well as for pronouncing a dismissal wrongful and for revoking such dismissal and for reinstatement to the previous work;
  • protection of membership rights in a commercial company under Art. 71 of the Commercial Act, or for revocation of a decision of the general meeting of the company, or revocation of a decision of the bodies of the cooperative or of NGOs;
  • protection of intellectual property rights;
  • ownership and other rights in rem over property or for trespass;
  • disputes concerning the exercise of parental rights, personal relations with the child, residence of the child and its maintenance, personal relations with the grandparents;
  • maintenance;
  • divorce;

In the abovementioned cases, the court shall make an assessment of whether the dispute is appropriate for mediation, taking into account the sample criteria set out in the law. The criteria are related to the relations between the parties, the undisputable facts on which the right claimed by the plaintiff is based, respectively the objections or counterclaims of the defendant, etc.

  1. The procedure of mediation.

During any stage of the court proceedings after the expiry of the time limit for a response to the statement of claim and prior to the conclusion of the trial, the court shall oblige (in the cases under item 1 above) or may oblige (in the cases under item 2 above) the parties to participate in a first mediation meeting. The parties are obliged to participate in a procedure of mediation only once in the proceedings.  The mediation procedure shall be conducted within a time limit specified by the court, which shall not exceed two months. By mutual consent of the parties, the procedure may continue after that period simultaneously with the examination of the case, or the proceedings may be suspended by mutual consent of the parties. The procedure shall take place in a court mediation centre at the relevant court.

The parties are obliged to participate in good faith in the first meeting of the mediation procedure with a total duration of one to three hours, and the mediator may also schedule separate meetings with the parties.  The mediator provides the court with information on the outcome of the mediation procedure and the participation of the parties in it.

  1. Who can be a mediator in an obligatory mediation procedure?

The mediator in an obligatory mediation procedure may only be a person with legal education who meets the general requirements for a mediator and has undergone an additional selection and specialized training.  The Supreme Judicial Council must issue аn ordinance in relation to the requirements and control over the activities of mediators.  The mediator shall be appointed by mutual agreement of the parties or by the court centre. The mediation centers of the district courts shall keep lists of mediators.

  1. Agreement in a procedure of mediation

An agreement, reached in a mediation procedure, shall be concluded in writing. Depending on the content of the agreement reached by the parties, the court proceedings shall be terminated or the court shall approve the agreement as a court settlement within seven days after the submission of the application to the court. If no agreement has been reached or the approved settlement refers only to part of the dispute, the court shall proceed with the examination of the whole case or respectively with the examination of the remaining part of the case.

  1. Benefits of mediation.

The costs of an obligatory mediation procedure held for a total duration of one to three hours shall be paid from the court’s budget.  If a party, after being obliged by the court, refuses to participate in a mediation procedure and loses the case, that party shall be liable for the costs of the mediation procedure. In cases where a first meeting in a mediation procedure has not been held due to a refusal of both parties, the costs of the mediation process shall be paid by them equally, regardless of the outcome of the case.

In the cases where the settlement results from an agreement concluded in a mediation process or where the proceedings have been terminated due to a withdrawal or abandonment of the claim as a result of any such agreement, 75% of the paid state fee must be refunded to the plaintiff.

By Kina Chuturkova, Partner, and Lilia Surgucheva, Associate, Boyanov & Co