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Each of the parties can claim conclusion of the final contract

The preliminary purchase and sale contract is a contract, by which the parties agree to enter into a new one, which can be conditionally called “final”. The reasons for signing preliminary contracts are different – from the lack of readiness for a final contract at that time to the existence of burdens that the parties want to be removed (which takes some time).

From preliminary to final contract

In the Bulgarian doctrine the preliminary contract is primarily seen in connection with the transfer of properties and property rights of them (for example the right to build, or the right to use a property, etc.).

According to art.19, para.3 of the Law of Obligations and Contracts (LOC) each party of the preliminary contract is entitled to bring an action for conclusion of the final contract. In this case the contract shall be considered as concluded from the moment when the court’s decision takes effect. The statement of claim should be filed before the court at the location of the property. Again, the registering of the statement of claim is done at the location of the property, in the respective registry agency according to the order, regulated under the Law for the ownership (LO). For the registering, an appeal must be filed, and there must be attached a certified copy of the filed before the court statement of claim with court’s stamp and reference number. There must be also attached: a covering letter, issued by the reporting judge in the case; current certificate of tax assessment of the respective property (which is issued within the last six months prior to the entry) and a sketch of the property. Registering shall be made by the registry judge’s order within the working day and if all the necessary documents are presented.

Registering the statement of claim

Why should we register the statement of claim for declaring the preliminary contract as final? Failure of its registering is not an obstacle for registering it further, but the acquired by the third parties rights of the property – subject of dispute in this case, are preserved if the acquisition of the rights by third parties is prior to the mentioned subsequent registering. In practice, there are cases of resale of the property by the transferor – defendant of the statement of claim under art.19, para.3. It is considered that the re-transfer, registered in the order, provided in the LO, is subsequent and is not enforceable against the person, who originally made the registering.

Therefore the subsequent transfer of the ownership of the property has no effect. The promised to be transferred property remains in the patrimony of the defendant, who owes the actual performance of the preliminary contract, because the rights of the claimant, who registered the statement of claim before the subsequent transfer of the relevant property is reserved by the made registering.

On the other hand, the registered statement of claim for declaring the preliminary contract as final can be enforced against third parties, having previously obtained the same property or property right, but who have not registered the acquiring act.

Multiple preliminary contracts

The importance of the registration of the statement of claim under art.19, para.3 of the LOC, is expressed in multiple preliminary contracts. There can competition between the multiple preliminary contracts, when two or more preliminary contracts have been concluded about the same final contract with the same subject. The question, which arises is – who should be given preference? The answer is that the buyer, who firstly claimed and registered the claim for declaring the preliminary contract as final, will be able to oppose the registering of any other third parties, acquiring the property after the mentioned registering. The rule is that about the constitutive registering and registering, providing enforceability against third parties, the one who will be preferred is that one, who made the registering.

The registering publicizes that for the property, respectively for the property right over the property, there is a pending legal dispute, expressing the importance of the registration of the statement of claim under art.19, para.3 of the LOC. The registering publicizes to third parties not just the existence of any dispute, but of a court dispute.

Through the claim, the party of the preliminary contract exercises the right to require the other party to fulfill its obligation under it. Under the statutory fiction the final contract is considered as concluded with the enforcement of the court decision.

The claim is between the parties of the preliminary contract, as third parties cannot principally want to declare the preliminary contract as final. The right under art.19, para.3 can be transferred; therefore parties to the proceedings can be both universal and private successors of the parties.

In order the claim to be upheld under art.19, para.3 of the LOC, the defendant must be the owner of the rights, which will be transferred by the court decision and therefore the claim will be rejected as unfounded if the defendant is not the owner of the property.

In case of transfer of the right of ownership of the property, the court checks whether the prerequisites for transferring the ownership by notary are there, including whether the transferor is the owner of the property. This obligation of the court is the same as the obligation of the notary who upon the transfer of the right of ownership or upon establishment, transfer, modification or termination of other property right over a property, is obliged to check whether the grantor owns the property.

At the finish line

If the claim is upheld, the court decision replaces the final contract. In its decision, the court states the clauses of the final contract and a description of its subject matter. The date of signing the contract shall be the date of entry of the court’s decision into force.

When subject of the case is a property, the law requires the claimant to pay the transfer fees and the public state and municipal obligations of the grantor if they are not paid. For claims against the grantor the state can direct the performance to the property acquired by the applicant, provided that such obligations have been payable on the date of the transfer, so that the claimant is able to intercept their payment on the due price.

The article has been published in Bulgarian, in Capital Daily.

Basic characteristics of presidential, semi-presidential and parliamentary republic

The modern state is manifested in various constitutional forms, which owe their historical development of the interaction between institutionalism and civil society. The substantive dimensions of numerous constitutions are determined by the forms of government, which are generally divided into Republic and Monarchy.

The Republican model of government creates the ideas for supremacy of the law and thus becomes the natural environment in which not the person of the monarch, but the law and the common will draw the development of the society. The constitutional state of the governance through the participation of all, observing the principles of popular sovereignty and responsibility of the institutions to the citizens stays on the basis of the modern democratic republic.

Within these basic characteristics of the model, there are several forms of republican government that can be distinguished – presidential, semi-presidential and parliamentary republic. The characteristics of each of them can be derived by considering the question at constitutional level, through a review of the supreme laws of the modern presidential and semi-presidential republics and their comparing with the established in 1991 in Bulgaria form of republican parliamentary government.

Historically, the first type of modern republican head of state is the president. This institution was introduced in 1787 with the adoption of the Federal Constitution of the United States where the president was declared titular of the entire executive power.

In the presidential republics people elect two institutions directly – the president – titular of the executive power, and the parliament – titular of the legislature, which the legal theorists call dualism of first degree.

Another, very characteristic of this form of government is the presence of firm separation of powers, which reflects in the inability the president and the parliament to terminate other’s mandates. In other words – nor the parliament can censure the president, nor the president can dissolve the parliament. Out of this hypothesis remains the exclusive hypothesis of impeachment – a procedure by which the legislature can indict high representative of the authority, including the president, about a serious crime, committed by them.

Differencia specifica of the presidential republics is also the role of the vice president. The vice president performs the so-called backup function, which consists in the fact that at any vacancy in the presidency, the vice-president shall assume the functions of the president until the expiry of the mandate.

Despite the firm separation of powers between the president and the parliament, there is some functional relationship, as the country politic could not be realized without the cooperation of the two institutions. The discrepancy between the party political affiliation and the vision for governance of the country between parliament and president can lead to separate governance, which is a clear prerequisite for blocking the governance system and insertion of the country into political crisis.

Another form of republican government in which the institution of the president is charged with great constitutional power, is the semi-presidential republic. The Weimar Constitution from 1919 of the First German Republic is considered as a prototype of the model, whose ideas were later adopted by the Fifth French Republic, in order to influence today.

Like the presidential system of government, in the semi-presidential there are also two institutions – president and parliament, elected directly by people, with the difference that the president is not the only titular of the executive power. Along with the president, a government also governs, headed by own leader – prime minister, which already leads to dualism of the second degree, or the so-called by M.Dyuverzhe “two head” power.

The constitutionally governed form of semi-presidential republics, taken in countries such as France and Portugal has both advantages and disadvantages. On the one hand, the two heads of government guarantee the allocation of responsibility and mutual control, but on the other – they pose a risk of conflicts between the titular’s of both institutions of the executive power, which in immature political societies would affect the stability of the state.

In Bulgaria the political transaction to democracy and free civil society is reflected in the constitutional parliamentary form of government. In the Constitution from 1991 the traditional schemes for flexible separation of powers enshrine, leading to the formation of typical parliamentary government relations between parliament and government.

Firstly, we have to mention the genetic connection between them, which, on the one hand, consists in the parliamentary origin of the government – its choice of the majority in parliament, and, on the other – in the mutual possibility of these two institutions to terminate ahead their mandates in the event that the political trust between them disappears.

The functional relationship between parliament and government as a whole is of greater importance for the stability of the parliamentary republic. During the implementation of the constitutional function both institutions need constant mutual support and cooperation in order to implement smoothly the country’s politic. This is so, because the government could not carry out their governance strategies without appropriate legislative, ratification, budgetary and financial support of the parliament, and, conversely, the legislature could not bring the laws into action by themselves.

The Constitution from 1991 defines the president of the republic as “head of state”. Although the president does not have the constitutional power to their equivalent in the presidential and semi-presidential republics, it is wrong to define the president as fully rated. In most general plan, the constitutional functions of the head of the state are related to the representation of the state in the international relations, mediating role in the political process of the country and ensuring the national security.

The comparing of the examined three forms of government recognizes the leading constitutional role in each of them. The strong head of state in the presidential republic, the two heads of government – president and government, divided the responsibilities to each other in the semi-presidential republic, and the collective veto of the government and the parliamentary majority in the parliamentary republic.

The personality, the political maturity or the majority?

The article has been published in Bulgarian, in Capital Daily.

Do we have to perceive the German experience

The bankruptcy system is an essential element for the financial stability of each country. The normative mode of the proceedings is used in the legislations of all modern legal systems, but it tolerates some differences, as to the range of entities to which the bankruptcy proceedings can be initiated. The Bulgarian legislator distinguishes itself as rather conservative compared to this circle of individuals and continues to follow the principle that bankruptcy proceedings can be initiated only to traders with the exception of the hypotheses, relating to the initiation of bankruptcy proceedings in hidden complicity, general partner and died or deleted sole trader.

In Bulgaria, the institution of bankruptcy is used in the Commerce Act and by its nature it is a universal enforcement under the direction and supervision of the court. The prerequisites for initiating bankruptcy proceedings could be individuated as commercial quality of the debtor and the establishment of insolvency, as well as a stated court decision. The purpose of the procedure is fair satisfaction of the creditors by adopting a plan for recovery or liquidation of the debtor’s property.

Bulgarian legislation does not address the question of bankruptcy of individuals, known as consumer bankruptcy. Justified or not, this fact testifies for a kind of retardation of our legislature of the modern international trends to expand the scope of the bankruptcy proceedings to individuals and non-traders.

At European Union level, there is a Regulation 1346/2000 as of 29 May 2000, which regulates the bankruptcy proceedings within the territory of the EU. It applies independently whether the debtor is a natural or a legal person and purposes to introduce common frameworks of the bankruptcy proceedings and a general range of legal entities, against which the proceedings can be directed. In principle, the Regulation should be applied also in Bulgaria, but at this stage it remains outside the scope of the domestic legislation. This circumstance is likely to undergo a change, as the EU seeks an effective implementation of the Regulation in all Member States. The introduction of the regulation in Bulgaria will lead to the need to adopt a detailed regulation of the bankruptcy of individuals, as the European law only outlines the general framework, related to the procedure. For the special rules, an application of the legislation of the respective Member State, at which territory the court has initiated the bankruptcy proceedings, is provided.

The German model

Examining the issue for possible introduction of the institute of the bankruptcy of individuals non-traders in Bulgaria, known also as consumer bankruptcy, we could look at the German model of production, given that the Bulgarian system of the civil law is generally Pandect, i.e. it is associated mostly with the German legal school.

The German law assumes that any individual, who can be a party in civil proceedings, can be declared bankrupt – a principle, which is a strong expression in the regulation of the consumer bankruptcy. The legal framework of consumer bankruptcy was introduced in Germany with the adoption of the German Bankruptcy Act 1994. The purpose of this institute is to allow the insolvent debtor to request the starting of bankruptcy proceedings and through the way of the amicable settlement to dispose of the remaining debt. The German law defines the entities that can benefit from the advantages of the consumer bankruptcy. The debtor must be “an individual, who does not exercise or has not exercised business alone”.

The purpose of the consumer bankruptcy

The purpose of the consumer’s bankruptcy is similar to that of the bankruptcy proceedings under the Commerce Act in Bulgaria. Priority before the German legislator is to assist the debtor in its rescue by stopping the individual foreclosures of the individual creditors, reaching an amicable settlement with the creditors, adopting a plan for payment of the obligations of the debtor and maximum satisfaction of all creditors in bankruptcy proceedings. The possibility the conscientious debtor to be relieved from further obligations is also added to this purpose, which reveals that inherently the consumer’s bankruptcy is associated with the institute of the “debt relief”. The possibility of relief of the outstanding debt can only benefit individuals, but it does not occur under the law, and must be expressly requested by the debtor. The request must be made in the form of a written request, a declaration to which applies to the debtor, that in the next six years the debtor is obliged to pay to the manager of the bankruptcy estate a certain part of their fixed income, such as those received in employment relationship.

Period of “good behavior”

The period of 6 years, during which the debtor is obliged to pay the manager the bankruptcy estate, a certain part of their income, is called a period of “good behavior”. During this period, the debtor assumes the additional duties, namely to provide half of the inheritance of the manager of the bankruptcy estate, to provide timely data on change of residence and place of work, not to do any preferential satisfactions, as payments are only powers of the manager of the bankruptcy estate.

During this 6-year period of “good behavior” of the debtor, the employer of the debtor transfers from their remuneration the provided part on account of the manager of the bankruptcy, who in turn annually distributes and transfers the payment of creditors. If the debtor is self-employed, their contributions to the manager must be in the amount, corresponding to the amount of the contributions, they would have done, if they worked on employment relationship.

After the expiry of the 6-year period of “good behavior”, the court after hearing the creditors shall come up with a public decision whether the debtor will be relieved of the outstanding debt, which in a positive decision would allow the debtor not top pay to their creditors this part of the obligations, to which they agreed in their agreement.

In the mentioned proceedings of consumer’s bankruptcy, especially in its part of debt relief, there are both advantages and disadvantages. More importantly is that this is a mechanism that is not alien to the Bulgarian legal system and which could help regulating the public relations and the financial stability in the country.

The article has been published in Bulgarian, in Capital Daily.

An interpretative decision of the SCC stops controversial practice under the Regulations for entering

The controversial practice issues are related to the Regulations for entering and the competence of the judges for entering in connection with the introduced institute in 2004 “Refusal of a judge for entering” led to the need the General Assembly of the Civil and Trade Division of the Supreme Court of Cassation to pronounce with an interpretative decision on the controversial court practice.

Interpretative decision 7 of the SCC examines the issue of the inspection’s scope, which a judge for entries should perform. According to the Regulations for entering, in case the entered in the Entry Register act does not meet the requirements of the law or is not subject to registration, the judge for entering issues a ruling for refusal. On this issue, some courts accept that the judge for entering can check the void of the act with a view of the documented in it content and refuse its entry if the transaction, objectified in it, cannot be done, is concluded in contradiction with the substantive law or when there are other grounds for void. Other courts are of the opinion that in the proceedings it is inadmissible to check the substantive conditions of the act, whose entering is requested.

What provides the decision

According to the decision of the SCC in view of the security character of the proceedings, as the entry itself is an act of unquestionable administration, within which it is not permissible to resolve legal disputes, and considering its main purpose – publicity and unenforceability it cannot be assigned to a judge for entering to check the substantive conditions of the entered act. If this act suffers from some defects, its disclosure would help the protection against them, because it enables the persons concerned to familiarize themselves with its contents and to attack it in court. Namely, in the context of the contested court proceedings, the rights of all affected persons from the entered act can be fully provided and the dispute can be solved by res judicata. Such a dispute before the judge for entering cannot be claimed, nor did he have the right to refuse entry under pretext that the existence of such a dispute is known or possible. The General Assembly of the Civil and Commercial Division (GACCD) of the SCC believes that it is unacceptable a judge for entering to refuse entering of a real estate transaction on the grounds that it circumvents or breaks the law, for example for reasons of an unfulfillment of a provided in the contract suspense condition.

Furthermore, under the existing contradictory court practice on this issue whether the entry of a copy of a testament with subject real estate or property rights over a real estate the rights of the transferor should be checked, the SCC states the view that the refusal of a judge for entering to enter a handwritten testament in the cases when no evidences for the rights of the testamented estate’s owner has been provided, is unlawful and that in the cases when the judge is not specifically charged by the law with performance of material functions, the judge has no right to examine the material prerequisites.

Is it required the act to be entered

The check, which the judge for entering has to do, is limited to that whether the act is subject to entry. It is although necessary to take into account the fact that the acts, subject to entry, are listed non-exhaustively in the Regulations for entering. Such acts have been also listed in a number of other laws such as SDA, CA, Law for the Registered Pledges. Furthermore, the examination is limited to that, if the act has been composed in compliance with the requirements for form and if it contains the proposed by the Regulations for entering content. The refusal can be justified of considerations of local incompetence of the judge for entering, the existence of which is monitored automatically or if the fee due is not paid. In examining the form, the judge for entering shall ensure compliance with the rule that the acts, which have to be entered, are these, which are performed by notary or with a notarized signature, but taking into account the fact that a special law may regulate the entry of a act in writing for example under the CA an in-kind contribution with subject property rights to real estate for entering a notarized statement of the company contract is provided. In order to check the content of the act subject to entry, a refusal should be held if there is no identification of the parties or identification of the real estate. An exception to this is when the law allows the entering of acts, which do not relate to individually defined properties, then the individualization of the real estate is not examined in the act and the entering cannot be refused due to lack of one.

It is important to be mentioned that it is not possible to refuse entering of court acts for reasons they do not meet the requirements of form or content. The judge for entering has no jurisdiction to examine the court acts, because the court has control functions to it, and not vice versa. When a court decision is submitted for entering which an enactment provides to be entered, the judge for entering shall enter it regardless of its content.

Who can appeal refusals for entering

There are controversial issues related to the locus standi of the individuals, entitled to appeal a refusal of a judge for entering. Some panels of judges the bailiffs and the notaries are not eligible to appeal the stated refusals, since they are not parties to the protective proceedings for entering of the act, while other courts have found that the submitted by these persons actions are admissible and subject to substantive examination. With its decision as of 25.04.2013, the SCC gives its binding interpretation on these issues, considering that both categories of individuals are procedural legitimate and can appeal the stated refusals of the judges for entering. According to it, they are interested parties within the meaning of the Code of Civil Procedure, as they are the individuals, who are interested to refer to leading the proceedings for entering the act authority, namely the judge for entering and to request the due assistance for implementation of the entry. An argument in support of this position is also the provision of art.32a, para.4 of the Regulations for entering, under which the particular bailiff/notary should be served the ruling for the stated refusal. Therefore, it cannot be accepted that these individuals are not entitled to appeal the refusal, which they have been served.

The article has been published in Bulgarian, in Capital Daily.

Part of the market process or a non-market incentive

Nowadays, the trade companies have economic power, whereby they can affect the mind and the choice of each of us, the consumers. Among the ways they use are the promotional campaigns or the so called sales promotions, enabling them to promote a specific brand of products through the media, advertising materials in the retailers and not least through the websites.

Matter is basically regulated by the Law on Protection of Competition (LPC), and in the practice of the regulator in the field – Commission for Protection of Competition (CPC), whose task is to protect the fair market competition. The desire of a trader to increase the demand for their products through additional market incentives is a part of the sales process, part of the market competition.

However, in the last few years, the useful competition becomes increasingly unfair. Recently, one of the most important fields of action of the CPC is namely the unfair competition. This presentation is limited to a brief analysis of the prohibition of unfair solicitation, regulated by the LPC. The most frequently used commercial tricks of the market players to attract consumers:

Sale of random or the so called raffles/games

The organization of games in order to attract more customers and increase sales of products or services offered could be considered as normal commercial practice. Quite often, against participation in tombola/game, consumers are promised prizes, which can range from small prizes such as backpacks, hats, coffee pots to such on a significant value as camcorders, TVs, trips to exotic destinations, cars and others.

The conducting of a raffle/game breaks the law when there are cumulative two objective elements, namely: 1) the possibility of winning a prize to be bound by a purchase of a certain product, i.e. there is a gratuitous character, and 2) the value of the promised prize significantly exceeds the price, which consumers pay for the same product. The regulator in its practice has perceived that the prize exceeds the value of the offered product or service when its value is 100 times higher than that of the purchased good/service, but not more than 15 minimum wages.

Therefore, if the prize does not exceed 100 times the price of the good/service, the second correction criterion should be applied, namely the promised prize may not exceed 15 times the minimum wage for the country. Often the big prizes like trips, cars and others fall under the second criteria.

Sale package or the so called promotional packages

A part of the sales process is also the supplements’ giving, which include the sales package, the so called promotional packages, which can be the purchase of a shampoo and the receipt of a balsam to it, as well as the purchase of a prepaid SIM card and the receipt of additional free minutes to it. Usually the merchants offer the promotional package with a discount, as the discounts and the practices of the CPC, considered eligible, are within ten-twenty percent. They represent a normal commercial practice and are one of the major ways to advertise a product or service.

The LPC prohibits the offering or giving of a supplement to the sold product or service, free of charge or against a fictitious price for another product or service. Thus, the legislator intends to avoid such demand, which can distract the consumers from one product to another, not because of their merit, but because of the opportunity to get something for free or at a fictitious price.

The legislator has defined three exceptions to the prohibition: promotional items of little value and a clear indication of the advertising enterprise; items or services, which, according to the commercial practice, belong to the product sold or the service rendered; goods or services as a rebate for sales in larger quantities. A difference between a supplement and a belonging should be made, as there is a belonging when a functional link between the main good or service and the further proposed one can be found, which cannot be used alone, as for example a basic service – internet, a belonging – modem. More questions causes, however, the third exception, namely goods or services as a rebate for sales in larger quantities.

The practice of the CPC shows that the discount should be in the form of a discount from the purchase price or of a natural discount (additional quantities of the goods/services). In the event that a discount is offered as additional goods or services, they should be identical to the main goods or services, purchased in larger quantities, for example giving free bread on sales of large quantities of the same type bread, but not to be of different nature, which creates a real possibility to harm the interests of the competitors, for example a laptop as a discount on the sale of large quantities of bread. On the other hand, the CPC has a controversial practice in connection with the implementation of the third exception.

In one of its decisions (Decision №1445 as of 18.11.2010) the Commission considers that the offered to the consumers free products – a bottle of oil and a kilogram of sugar as a gift to the purchased one ton wood, although not of the same type, falls within the scope of the third exception, namely: a rebate for sale in large quantities in the form of additional goods. The CPC determines that in the present case a free supplement (a bottle of oil and a kilogram of sugar) is not of such nature, amount or value that harms the interests of the competitors and is not able to independently induce the consumers to purchase one ton of wood.

The aim of the commercial companies to win the consumers by manipulating the consumer demand by promising large rewards and “favorable” offers is so great that they often use non-economic means, which distorts the market process and turns the promotional campaigns in a non-market incentive.

The promotional campaigns, organized on a local or national level, reflect directly on the market on the territory of the whole country and even the conduction of short so-called seasonal promotions are able to divert the consumer’s demand. This creates preconditions the meaning of the economic competition to be displaced, as in the background are placed the qualities and the prices of the goods. The interests of the competitors are damaged, as their turnover decreases and they are forced to organize similar promotional campaigns.

The purpose of the promotional campaigns is namely the “pocket” of the user. However, the consumers despite the methods used by the merchants should be guided only by the characteristics of a certain product or service.

The article has been published in Bulgarian, in Capital Daily.

Protection for consumers and producers or questions with more than one answer

The Ordinance for specific requirements for dairy products introduced new requirements for them and for the imitating them, containing milk in their composition, as well as requirements for the producers and merchants of these products and their labeling. The idea is to regulate and limit the use of powdered milk and vegetable fats in traditional dairy products and to provide in such a way greater protection of both consumers and Bulgarian producers. However, a number of issues and challenges have been simultaneously put to the traders and manufacturers of both kinds of products.

Different treatment of domestic and foreign production

In the first place, this is the requirement that the new rules apply only for products, produced and offered on the Bulgarian market. For products, produced outside the country, but offered here, only the rules for translation of the names are applicable. This raises the question of a discriminatory treatment of imitating products, produced locally and those products, produced outside the country. Under the Ordinance, the local products must not contain any dairy names as images of milk, cheese and must be sold on individual stands. At the same time, the imitating products, made outside the country, have to be sold alongside local dairy foods, as long as the word “milk” or “milk names” such as cheese, butter, cream, etc., reserved only for dairy products (“milk names”) are not presented in the name of the foreign products. Is not there any danger of confusing the two types of products and of deceiving, accordingly injuring the local producers, who have to follow the more stringent restrictive rules? On the other hand, does the mentioned passive rule mean that a product, traditionally known as cheese, produced in the European Union, but containing vegetable fat, cannot be sold in Bulgaria under its usual name, but has to be called a product with vegetable oil, blue delicacy and others? Does this not lead to greater consumer confusion, thinking that cheese as part of the name is commonly used for this type of products and its composition and origin are known, which does not require a change of its name?

In this connection, it has to be mentioned that Council Regulation №1234/2007of 22 October 2007 establishing a common organization of agricultural markets and on specific provisions for certain agricultural products incorporated into the Ordinance, provides the possibility of an exception to the milk names. This exception was regulated by the repealed Ordinance for specific requirements to the names and labeling of milk and dairy products on the market, and the exception allowed the use of those mentioned names for imitation dairy products, which they are traditionally used for and their origin and composition are known, as well as the use of these terms in describing the characteristic quality of the product. Although the exception is not presented in the new ordinance, it applies under the Regulation, and Bulgaria can send a list with the names, which it considers as falling under the exception on the territory of the country to the European Commission.

Unclarities about dairy products

There are also unclear moments about the listed in the Ordinance milk names, which, as stated, can be used only for diary foods and drinks. These are whey, butter, cheese, yogurt, kefir, koumiss, cheese, cottage, yellow cheese (“kashkaval”), buttermilk, casein, dehydrated milk fats, fruit and/or flavored, and/or concentrated dairy products, as there are specified requirements that must be met for each one, in order to be referred in the mentioned order. For example, yellow cheese (“kashkaval”) is used for a type hard cheese, suffered under cheddaring and vapors compressed curd. If this is not met, the product cannot be considered as dairy product and cannot be called “kashkaval”. There arises the question whether the ayran for example, which was excluded from dairy names with the amendments as of 4.01.2013, can contain vegetable fats. Do not the new rules deviate from their purpose to protect the health of the consumers by using vegetable fats in traditional dairy products. But what is a dairy product – this name should be used for a product, exclusively derived from milk, with the understanding that there can be additional substances, necessary for its production, provided that these substances are not used for replacing, in whole or in part, any milk ingredient. However, it is possible for dairy products to contain up to 20% dry milk, but above this percentage the product is already imitating and not a dairy product. In the latter, the addition of fats and protein with non-milk origin is prohibited, except gelatin, which can be added for a technological purpose in the yogurt, in fruit and/or concentrated dairy products.

Requirements for imitating products

The requirements for imitating products are also interesting. They are defined as products, analogue of the milk ones, listed above, in which the milk ingredient is replaced by a partial or complete substitute such as fat and/or protein of non-milk origin. This provides a clarification of the scope of the Ordinance and in particular that the described already cheese, “kashkaval”, yogurt, etc. made however from milk and vegetable fats, fall under the new rules. Accordingly, it follows that the ice cream, for example, does not fall within the Ordinance, unless it is called milk ice cream. The milk ice cream should not contain vegetable fats, but only the legally permitted diary ingredients. It was also mentioned that the name of the imitating products should not contain the word “milk” or milk names. This means that a spreadable product for example, containing milk and vegetable fats, cannot be called cream-cheese, but rather spreads cream with vegetable fats or otherwise, but compulsory without the word “milk, cheese, cream” etc. It is not allowed the imitating products to contain in their name the label and any form of advertising or performance specifications that indicate or suggest that they have the characteristics of milk or a dairy product. Moreover, as it was mentioned, only the foreign products must meet the Ordinance’s requirements for the name. The Ordinance’s other provisions only apply for the domestic products. In this example, if the spreadable product is not Bulgarian, and is named correctly, this should mean that its package or its advertising can contain pictures of milk or a dairy product, since the ban to avoid milk names does not apply to it. A misleading could be potentially claimed under the Consumer Protection Act, but if the food ingredients are listed on the label and it is labeled correctly, this would hardly lead to any sanctions.

However, the word milk and milk names can be used in the imitating products, but only in order to explain the basic raw and ingredients, they are made of. It is important to be noted that the imitating products must be placed on individual stands on the market, clearly labeled “Imitating products, containing milk in their composition”. This should provide greater recognition by consumers which products are made of pure milk and which ones contain vegetable fats, such as palm oil, for example.

Also new is the requirement that the producers of milk and dairy products, who cut and repackage milk and dairy products, cannot produce, cut and repackage imitating products on the territory of an enterprise at the same time. This rule is also seen controversially, because, on the one hand, it guarantees a separation in the production of dairy and imitating products, but – on the other hand, it restricts the activity of the Bulgarian dairy enterprises, which will have to build another enterprise in order to continue producing dairy products and their cheaper analogues.

The article has been published in Bulgarian, in Capital Daily.