The Bulgarian Parliament Ordered to Pay Damages to a Private Entity

23 September 2022

Corporate Disputes, Private Equity, Private companies, News

In a judgment of the Bulgarian Supreme Court of Cassation (SCC), the Bulgarian Parliament was found in breach of EU law and ordered to pay damages plus interest in the amount of BGN 200,000 (approximately EUR 102,000) to the claimant, a private entity. This is noteworthy in particular because it is becoming increasingly accepted to find the legislature liable for damages, part of a larger trend of democratisation of the Bulgarian legal system.


Bulgaria acceded to the EU in 2007. Between 2006 and 2015, there used to exist a legal provision allowing the state to place a mortgage over the property of undertakings which had been privatised to guarantee its due receivables. The state acted through its Agency for Post-Privatisation Control (APPC). The EU Commission found this legal provision to infringe the freedoms of establishment and movement of capital (Arts. 49 and 63 TFEU) as it could dissuade potential investors from other Member States and in 2012 opened proceedings against Bulgaria. However, the Bulgarian Parliament only repealed the law in 2015.

During that period, in 2007, the APPC had placed a mortgage over the properties of an undertaking whose privatising owner owed the state instalments and liquidated damages. The undertaking suffered damages in the amount of BGN 120,000 (approximately EUR 61,000) and in 2015, after the repeal of the law, it filed a claim against the National Parl and the APPC, jointly and severally, for, respectively, not repealing the law as soon as Bulgaria acceded to the EU, and for not directly applying a provision of EU law which is contradicted by a national law.

Final judgment

In a nutshell, the current National Parliament argued it could not be held liable for laws passed by previous assemblies, that it itself had no legal initiative and that no actual obstruction of the flow of foreign capitals had materialised. The APPC argued it had applied the national law and it could not have done otherwise, among other things. After seven years, the case reached the highest civil court in Bulgaria, the SCC which rejected the defendants’ arguments.

The SCC recalled the principle of state liability developed in the Francovich, Brasserie du Pêcheur, Factortame and other seminal cases of the Court of Justice of the EU, namely that EU law confers a right to reparation where three conditions are met: 

  • the rule of law infringed must be intended to confer rights on individuals; 
  • the breach must be sufficiently serious; and
  • there must be a direct causal link between the breach of the obligation resting on the State and the damage sustained by the injured parties.

It was sufficient that the law could dissuade potential investors regardless of whether they had actually done so or not. Also, the state was liable regardless of which of its bodies exactly committed the infringement. It was no excuse that previous assemblies had passed the law in question – the Bulgarian Parliament is a contiguous body of state power and it was responsible for maintaining the law. 

Finally, under the principle of primacy, the APPC ought to have applied EU law directly and refused to apply the contradicting national provision in accordance with the principle of primacy, first heralded in the Costa case as early as the 1960’s. 

Thus, the SCC found the defendants jointly and severally liable and ordered them to pay damages plus interest to the claimant undertaking.

The bigger picture

This judgment comes as a part of a larger trend of democratisation. Historically, claims against the highest Bulgarian public bodies for actions within the scope of their constitutional powers have been considered inadmissible and lower bodies have been reluctant to disapply national laws despite the Constitution expressly giving intergovernmental agreements primacy and EU law later imposing its own primacy over the whole of the national legal system. However, during the last decade, private claimants have been increasingly willing to seek their rights in court against the Bulgarian Parliament in particular.

As a part of this trend, in 2019 were introduced amendments to the State and Municipalities’ Liability for Damages Act 1988, which laid down the procedure for damages arising from the state’s liability for infringement of EU law (the novel s 2c).

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