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McGregor & Partners Newsletter – May 2016

In focus in Bulgarian legislation and court practise

For and against the changes in the Election Code

As of May 26, 2016 amendments to the Election Code come into force. The main changes are comprised in several directions:

  • The Code introduces a compulsory voting, specifying that the name of each citizen who has not exercised his right to vote in two consecutive election of the same type will be written off the voter lists for the next elections;
  • The ballot paper will contain additional option stating “I do not support anyone”;
  • A new experimental electronic voting is provided, aiming to ensure greater opportunities for Bulgarian citizens abroad to participate in elections through remote electronic voting. The concept will take effect after January 1, 2018 and will be used in three consecutive elections, including partial (regional) elections, in one region of the country.
  • Polling sections abroad will only be located in embassies and consulates. There are two exceptions to the rule. Polling stations in EU Member States with no Bulgarian diplomatic missions or consulates will only be formed if at least 100 voters have applied to exercise their vote. Polling station in non-EU countries with no Bulgarian embassies or consulates present, in accordance with the decision of Central Election Commission on the proposal of Ministry of Foreign Affairs, will be open in cities with a population over a million. The section shall be open if at least 100 voters have applied and expressed their willingness to exercise their right to vote.

The adoption of the above provisions was accompanied by a wide public reaction. After the second reading of the Bill, the President of Bulgaria exercised his right and vetoed the new Code and returned to Parliament the controversial points relating to polling sections abroad for further debate. The motive was the inequality among Bulgarian citizens on the basis of personal status (location of residence abroad) in exercising their right to vote. According to Art 6 of the Constitution of Republic of Bulgaria all citizens are equal before the law and neither abridgement of rights nor any privileges whatsoever shall be admissible on the basis of personal status. The Parliament, however, rejected the veto of the President.

The Court annuls Decision SP-1 for the net specific generation of electricity from RES

On July 31, 2015 the Energy and water regulatory commission (EWRC) published on its website Decision SP-1 setting the maximum levels of net specific production of electricity from renewable energy sources, to be purchased under preferential price. Few hours later such Decision was unavailable. On 03.08.2015 EWRC published again on its website a decision with the same number and date (Decision SP-1/31.07.2015), which for some producers of electricity from solar power plants has different content than the originally published one.

With its judgment as of 16.05.2016 under administrative proceedings initiated by the prosecution, Sofia Administrative Court has annulled Decision SP-1 published on 03.08.2015, considering that the amendments in the values of net specific production were made in substantial violations by EWRC, which lead to lack of will for adoption of this act. On the other hand, according to the judgment Decision SP-1 initially published on 31.07.2015 has caused legal effect.

The judgement of Sofia Administrative Court is not final yet, being subject to appeal before the Supreme Administrative Court. In case that the latter confirms this judgment and Decision SP-1 published on 03.08.2015 is finally declared null and void, but at the same time Decision SP-1 published on 31.07.2015 remains valid, this will cause additional uncertainty with regard to the applicability of the controversial Decision SP-1 and the outcome of the numerous pending appeals of renewable producers against it.

New Law defends the rights of the foreign employees in Bulgaria

As of May 21, 2016, an entirely new Labour Migration and Labour Mobility Act comes into force, which aims to harmonize Bulgarian legislation on free movement of workers and employment of foreigners – citizens of third countries on the territory of Republic of Bulgaria with European standards. As an addition the Act strives to codify the legislation in this field, which at that time is fragmented into different types of regulations (mainly the Law on Employment Promotion and its regulations). The provisions of the Act expressly preclude any forms of discrimination and set out the conditions under which access shall be granted to a citizen of a third country to the Bulgarian labour market, namely if the citizen: (i) has an employment contract with a local employer; (ii) is on a business trip or is sent within the provisions of service on the territory of Republic of Bulgaria; (iii) is transferred as a result of intra-corporate transfer; (iv) performs self-employment activities. New requirements are introduced for appointment to an office in Bulgaria. It is necessary: the employer to conduct a preliminary research on the labour market; the total number of foreign employees of the local employer should not exceed 10 per cent of the average number of payroll employees Bulgarian nationals, or nationals of other EU Member States in the previous 12 months; the working conditions and payment should not be less favourable than those offered to Bulgarian citizens for the labour category; foreigner has specialized knowledge, skills and experience. It is provided that granting an access should be allowed by decision of the Executive Director of the Employment Agency within 30 days after application, except in cases of highly qualified employment for the EU Blue Card-15 days. The term of the contract with the local employer is the duration for which the access is granted, but no longer than 12 months. In addition, the new Act aims to ensure the protection of Bulgarian citizens exercising employment in the territory of third countries, and provisions are provided ensuring a great amount of obligations for persons with whose assistance and mediation Bulgarian nationals work in third countries.

In force as from May 21, 2016, there are amendments to the Foreign Nationals Act that regulate the conditions of residence of third-country nationals in the Republic of Bulgaria, who fulfil the conditions for access to the labour market within the meaning of the Labour Migration and Labour Mobility Act. The new provisions envisage conditions for authorization for continuous residence of persons wishing to have access to self-employed activities, workers seeking employment on a seasonal basis for a period up to 90 days, as well as persons transferred to Bulgaria as a result of intra-corporate transfer.

Longer terms of the concession agreements

The public consultation on the proposed new Law on Concessions ended on May 10, 2016. The new bill provides for annulment of the currently in force Concessions Act and the Act on Public Private Partnerships. The bill sets out three types of concessions: for construction, for services and for opportunity to use state and municipal property. The procurement procedures for construction and services will provide the opportunity contracts to be signed for a long period of time, not as it is currently 35 years. The new kind of concession for usage will have a maximum duration of 25 years. Two new procedures for concessions are introduced- competitive procedure with negotiation and the competitive dialogue. A new feature is the proposal concessions to be awarded directly by the ministers and mayors, while the Council of Ministers and municipal councils will endorse the main acts relating to the awarding and implementation of concessions. The new Act implements a “European Threshold” for concessions for construction and services that are worth over 5,225 million euro. In this case, the procedure is covered by the European Directive on Concessions. Concessions for the extraction of mineral resources are excluded from the scope of the bill.

Supreme Cassation Court on the issues concerning road traffic offenses

At the request of the Prosecutor General Sotir Tsatsarov and Justice Minister Ekaterina Zaharieva, the Criminal Division of the Supreme Cassation Court is about to rule on a number of issues concerning road traffic offenses. The controversy was triggered by the judgment of Supreme Court judges, who reduced the sentence of Dian Stanchev, who hit Lora Kazanlieva on a walkway in Varna and caused her death. To issue the controversial judgment, the magistrates have taken into account that the deceased Lora, although crossing the walkway, had contributed to the accident. The judgment provoked a wide public response.

News on European Union Law

New Customs Code of the EU

As of 1st of May 2016 a new set of Customs rules of the European Union, which creates Union Customs Code, valid throughout the customs territory of the EU enters into force.

The purpose of the new provisions is to allow better consumers protection against illegal and counterfeit goods which do not respect European environmental, health and safety requirements.

The new Code provides for the use of new information systems that will provide fast data of the quality for the exchanged goods and will allow for much closer coordination and control between the administrations of the Member States. Moreover, it allows traders to clear customs procedures more simply and quickly, consumers to receive goods faster and cheaper.

EU General Court confirms that German law on renewable energy involved State aid

With its Judgment as of 10 of May 2016 the General Court confirms that the German law on renewable energy of 2012 (the EEG 2012) involved State Aid. The EEG 2012 laid down a scheme to support undertakings producing electricity from renewable energy sources The law thus guaranteed those producers a price higher than the market price. In order to finance that support measure, it imposed an ‘EEG surcharge’ on the suppliers to the final customers, which in practice was passed on to the final customers. However, certain undertakings, such as electricity-intensive undertakings in the manufacturing sector were eligible for a cap on that (passed on) surcharge in order to maintain their international competitiveness. In its decision of 25 November 2014, the Commission found that, although the support laid down by the EEG 2012 for undertakings producing electricity from renewable energy sources constituted State aid, that aid was, however, compatible with EU law. It also classified the reduction in the EEG surcharge for electricity-intensive undertakings as State aid. Since it took the view that those reductions were for the most part compatible with EU law, it ordered recovery in respect of a limited part of the reductions only. This decision was contested by Germany.

However, in the present judgement the General Court rejects all the arguments by which Germany sought annulment of the Commission’s finding that the EEG 2012 involved State aid and it dismisses the action in its entirety. According to the Court, the Commission was correct in taking the view that the reduction in the EEG surcharge for electricity-intensive undertakings conferred upon them an advantage within the meaning of EU law on State aid as well as that the EEG 2012 involved State resources. The motives of the General Court are that the mechanisms under the EEG 2012 result, principally, from implementation of a public policy, laid down by the State through the EEG 2012, to support producers of EEG electricity.

ECJ to decide about the controversially awarded remunerations to legal advisors

The Bulgarian courts have the practice to award lawyers remuneration for the benefit of legal entities and sole traders if they are represented by legal adviser according to the provisions of Art 78, para 8 of the Bulgarian Civil Procedure Code. However, it is very often debated whether the awarding of lawyer remuneration to legal advisor is in compliance with the EU law. In this respect, by virtue of order from April 26, 2016 the Sofia Regional Court referred a preliminary ruling to the European Court of Justice, requesting an interpretation of the provisions of Bulgarian legislation in relation to European standards and determination whether the rules for competition protection, outlined in Art 101, §1 TFEU and Directive 77/249 / EEC regarding facilitation of the effective exercise by lawyers of freedom to provide services, have been violated. In its request, the court points out arguments concerning the difference in the status of lawyer and legal advisor. As a rule, legal advisers work under an employment contract and the amount payable to their employer in the event of a favourable outcome of the case does not affect their remuneration. Lawyers, on the other hand, are subject to admission to the Bar after examination and the law even contains a restriction to their right to appear before some courts, which ceases to have effect after the acquisition of a certain professional experience and seniority. However, there is no such restriction for the legal advisers. Lawyers perform business activity and meet the definition of “enterprise” within the meaning of competition law. Legal advisers are not separate business subjects. His commitment under the provisions of the contract with his employer makes him subject to the orders and disciplinary power of the economically more active party in the legal relationship. Employers, through the hired by them legal advisers, carry out activity which is competitive to the legal activity and is contrary to the requirements of Directive 77/249 / EEC. The ECJ is about to open a case and consider the request.

Meanwhile, the awarding of remuneration to legal advisers will be examined by the Constitutional Court as a result of an enquiry submitted by the Ombudsman of the Republic of Bulgaria seeking a declaration to unconstitutionality of Article 78, paragraph 8 of the Civil Procedure Code.