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McGregor & Partners Newsletter – July 2015

In focus in Bulgarian legislation

Law on supplement of the Penal Procedure Code (SG 42 as of 09.6.2015)

The adopted legislative changes are designed to increase the safety and efficiency when imposing security measures and other forms of procedural coercion that apply to defendants and culprits to ensure the smooth conduct of criminal proceedings and the implementation of the entered into force sentence.

What are the main changes in this direction?

  • when the defendant is found guilty, is sentenced to imprisonment, the execution of which is deferred under art. 66 of the Penal Code and there is a real danger of absconding, the court may replace the security measure with more severe, or to take such.
  • when the culprit is found guilty and is sentenced to not less than ten years’ imprisonment or a heavier punishment, it is assumed that the real danger the culprit to abscond occurs unless the evidences in the case establish otherwise.

The changes in the PPC affect a major issue, related to the special investigative means, as the amendment states that:

    the permit for using special investigative means in respect of judges, prosecutors and investigators shall be given in advance only by the chairman of the Supreme Court of Cassation or by expressly authorized by them vice-chairman, at the request of the head public prosecutor or a specifically authorized by them vice.

Bill of the Law on Energy Sector Act

The proposed bill aims to allow the Commission for Energy and Water Regulation (CEWR) to extend the regulatory period, ending on 30 June 2015, for the prices for companies in the sector “Electro energy” and “Thermo energy” to 31 July 2015.

In the motives to the bill, the importer directs CEWR to take into account some “current issues” for the formation of its final decision, namely:

  • The scope of the regulation for reducing the burden, related to the costs for energy from renewable energy sources and the need for communication with the EC.
  • The declared intentions of the government for reducing costs in the state companies.
  • The ongoing monitoring of the Agency for state financial inspection in the companies, producing electricity from renewable energy sources.

News on European Union Law

With Council Decision (EU) 2015/809 of 19 May 2015 designating the European Capitals of Culture for the year 2019 in Bulgaria and Italy, the Council of the European Union has adopted the decision that Plovdiv is designated as „European Capital of Culture 2019”.

A request for a preliminary ruling from the Administrative Court Sofia-city (Bulgaria) lodged on 16 March 2015 – H. M. v Agency for State Financial Inspection (ASFI) is published in the EU Official Journal – C171 26.05.2015, in which the court refers the following questions: 1.Is Article 1 (9) of Directive 2014/18/EC1 to be interpreted as meaning that a body/company is a body governed by public law merely because over 30% of its revenue from its activity in the previous year is derived from medical activities which were paid for out of the National Health Insurance Fund and carried out in conditions of effective competition with other medical establishments. 2.Is Article 1 (9) of Directive 2004/18 to be interpreted as meaning that the provision of medical services in conditions of effective competition by private companies established for profit-making purposes may be regarded as ‘meeting need in the general interest’. 3.Is Article 1 (9) of Directive 2004/18 to be interpreted as precluding Paragraph 1, point 21 of the Additional Provisions of the Law on public procurement, according to which it is sufficient, for the purposes of determining that a body is a body governed by public law, if just one of the criteria corresponding to the cumulative criteria laid down by that directive is met.

EFTA Surveillance Authority Decision №301/14/COL of 16 July 2014 amending the procedural and substantive rules in the field of State aid by adopting new Guidelines on State aid for environmental protection and energy 2014-2020 [2015/790] is published in the EU Official Journal – L131 28.05.2015, as Part III – Horizontal rules. Guidelines on State aid for environmental protection and energy 2014-2020 regulates the aid to energy from renewable sources, namely general conditions for investment and operating aid to energy from renewable sources, operating aid granted to energy from renewable sources, energy-efficiency measures, including cogeneration and district heating and district cooling, aid for resource efficiency and in particular aid to waste management, aid to carbon capture and storage, aid in the form of reductions in or exemptions from environmental taxes and in the form of reductions in funding support for electricity from renewable sources, aid to energy infrastructure, aid for generation adequacy, aid in the form of tradable permit schemes, aid for the relocation of undertakings.

A Notification from the Republic of Bulgaria pursuant to Directive 94/22/EC of the European Parliament and of the Council on the conditions for granting and using authorizations for the prospection, exploration and production of hydrocarbons is published in the EU Official Journal – C179 02.06.2015, according to which Bulgaria notifies the information below pursuant to art.10 of the Directive. In accordance with the Underground Natural Resources Act, the Council of Ministers of the Republic of Bulgaria is the competent authority for the granting of authorizations to prospect and/or explore for oil and gas and the granting of concessions to extract oil and gas on the proposal of the Minister for Energy. The Council of Ministers accordingly empowers the Minister of Energy to conclude a contract for prospecting and/or exploring for oil and gas or to conclude a contract for extracting oil and gas.

Regulation (EU) 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings is published in the EU Official Journal – L141 05.06.2015. This Regulation shall apply to public collective proceedings, including interim proceedings, which are based on laws relating to insolvency and in which, for the purpose of rescue, adjustment of debt, reorganization or liquidation: a) a debtor is totally or partially divested of its assets and an insolvency practitioner is appointed; b) the assets and affairs of a debtor are subject to control or supervision by a court; or c) a temporary stay of individual enforcement proceedings is granted by a court or by operation of law, in order to allow for negotiations between the debtor and its creditors, provided that the proceedings in which the stay is granted provide for suitable measures to protect the general body of creditors, and, where no agreement is reached, are preliminary to one of the proceedings referred to in point a) or b). Where the proceedings referred to nay be commenced in situations where there is only a likelihood of insolvency, their purpose shall be to avoid the debtor’s insolvency or the cessation of the debtor’s business activities. The Regulation shall not apply to proceedings referred to a) insurance undertakings; b) credit institutions; c) investment firms and other firms, institutions and undertakings to the extent that they are covered by Directive 2001/24/EC; or d) collective investment undertakings.

Judgment of the Court of 23 April 2015 (request for a preliminary ruling from the Supreme Administrative Court (SAC) – Bulgaria (Case C-111/14) is published in the EU Official Journal – C205 22.06.2015. Referring court is SAC, while parties to the main proceedings are: applicant GST – Service AG Germany and defendant: Director of Directorate “Appeal and tax-insurance practice” Plovdiv at the Central Administration of the National Revenue Agency (NRA). According to the operative part of the judgment: 1.Art.193 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, as amended by Council Directive 2010/88/EU of 7 December 2010, must be interpreted as meaning that the only person liable to pay the value added tax is the taxable person supplying services, where those services were supplied from a fixed establishment located in the Member State in which the value added tax is payable. 2.Art.194 of Directive 2006/112, as amended by Directive 2010/88, must be interpreted as not permitting the tax authorities of a Member State to regard as liable for the payment of value added tax the recipient of services supplied from a fixed establishment of the supplier, where both the latter and the recipient of those services are established in the territory of the same Member State, even if that recipient has already paid that tax on the mistaken assumption that the supplier did not have a fixed establishment in that State. 3.The principle of the neutrality of value added tax must be interpreted as precluding a national provision which permits the tax authorities to refuse to grant the supplier of services a refund of the value added tax which the supplier has paid, when the recipient of those services, who has also paid the value added tax in respect of the same services, is refused the right of deduction on the ground that that recipient did not have the corresponding tax document, any adjustment of tax documents being precluded under national law where a definitive tax adjustment notice exists.

Court practice

By ruling as of 8 May 2015 under civil case № 1867/2015, the Supreme Court of Cassation (SCC) ruled that claims against government agencies for damages, caused by their acts, actions or omissions, contrary to the law of the European Union (EU) will be heard by national courts under the Act on liability for damages incurred by the state and the municipalities (ALDSM). The ruling provides real access to court for the seeking compensation from the state for violations of the EU law.

In the proceedings under the ALDSM a state fee of 10 leva for individuals and 25 – for legal entities shall be paid, but expenses in these cases are not paid in advance by the claimants. If their claim is upheld – in whole or in part, the defendant shall pay all costs, including the paid by the claimant state fee and remunerate for a lawyer. Costs of witnesses, expert reports, transfers and others are paid from the budget of the court or the defendant. Only if the claim is entirely dismissed, as well as withdrew and denied, the claimant shall pay costs after completion of the case.

News of the Law firm

On 28.05.2015, Sofia Court of Appeal rendered a decision under case, initiated and led by the Law Firm McGregor and Partners, about returning of the paid by a RES producer to CEZ Distribution Bulgaria AD access fee, determined by Decision № C-33 as of 14.09.2012 of SEWRC. With its decision, the Court of Appeal revoked the decision of Sofia City Court as incorrect and judged CEZ to pay to the RES producer the temporary price paid for access to the electricity distribution network. According to the deciding panel of the court, CEZ has no right to withhold the paid in this amount access fee. In burden of the EDCs is to establish that the collected pursuant to the revoked Decision C-33 access fee to its determined amounts is payable by the RES producers under the mandatory rules of the law. This is another success for the RES producers against EDC in connection with the controversial access fee.