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Burden of Costs in Civil Litigation in Bulgaria

Burden of Costs in Civil Litigation in Bulgaria

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The burden of costs in litigation has always been of great importance to people and companies deciding whether to bring a civil action. 

Under Bulgaria’s current Civil Procedure Code (CPC), litigation costs include the state fee, lawyers’ fees, deposits for expert opinions appointed in the trial, fees for calling witnesses, and costs for obtaining interim measures. Litigation costs do not include the costs of translations, certifications, and legalization of documents, collection and examination of evidence, utilities, travel expenses, preliminary legal opinions, and so on. 

The basic principle in Bulgarian civil procedure law is that the losing party pays the litigation costs of the winning party, proportional to the accepted part of the claim. Each court instance is obliged to rule on the issue of costs in its judgment, and according to the established case law of the Supreme Court of Cassation of the Republic of Bulgaria (SCC), before the final hearing in each respective court instance each party must present the Court with a comprehensive list of its litigation costs – including lawyer’s fees – and evidence of actual payment. If a party fails to provide such a list, or fails to demonstrate actual payment, the Court will reject the claim for costs as unproven and the party will not have the right to seek an amendment of the judgment in this part.

The costs section is also an enforceable part of the court’s judgment. In order to pursue reimbursement of awarded costs, the party seeking them should obtain from the Court a writ of execution and initiate an enforcement case with a judicial enforcement officer (bailiff). Costs incurred within the enforcement case, such as bailiff’s fees and attorney’s fees, are also collectable from the debtor.

Unlike the state fees and the deposits for expert opinions and witnesses, which are both explicitly defined by law or by the Court, lawyer’s fees may be disputed as excessive by the opposite party. Objection may be filed until the last hearing in the respective court instance. The main criteria is whether the claimed fees correspond to the factual and legal complexity of the case. The Court, at its discretion, can decide to reduce the claimed lawyer’s fees as excessive. However, all Courts have to comply with the statutory case law of the SCC, according to which the lawyer’s remuneration cannot be reduced below the minimum amount stated in special Ordinance 1 of 2004 on the minimum amounts of attorney fees (promulgated in the Official Gazette by Issue 64/2004).

It is worth noting that the current CPC provides several exceptions to the basic principle on distribution of burden of litigation costs. The first exception depends on the outcome of the case, as each party has the right to claim its costs in accordance with the accepted or rejected part of the claim. The second exception depends on the behavior of the parties, as, if the defendant did not cause the litigation and acknowledges the claim, the costs are borne by the plaintiff, even though the decision is favorable to him. Another exception to the principle involves termination of the case due to refusal or withdrawal of the claim, procedural violations, non-payment of the state fee, inadmissibility of the claim, and so on, in which case the defendant’s costs should be borne by the plaintiff. In case of a court settlement, the parties may agree to split the costs. In such case, the Court reimburses 50 percent of the paid state fee to the plaintiff.

The Bulgarian CPC does not recognize the funding of litigation costs by outside third parties (which is allowed in the U.S., for example), but the parties have the option of purchasing litigation expenses insurance under the Bulgarian Insurance Code if the estimated cost amount is significant.

By Antonia Kehayova, Head of Dispute Resolution, CMS RRH Sofia

This Article was originally published in Issue 4.8 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

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CMS Sofia is a full-service law firm, the largest international law firm in Bulgaria and one of the largest providers of legal services in the local market as a whole. The breadth and depth of our practice means that our lawyers are specialised, with a level of specialisation that few of our competitors can match.

CMS Sofia is the Bulgarian branch of CMS, a top ten global legal and tax services provider with over 5000 lawyers in 43 countries and 78 offices across the world.

CMS entered the Bulgarian market as one of the first internationally active law firms in 2005 and is now among the most respected legal advisors in the country. We have 7 partners, 4 counsel and over 30 lawyers in our office in Sofia.

Our legal experts, who are rooted in Bulgaria’s local culture, can also draw on years of experience in foreign countries and are at home in several legal systems at once. We know the particularities of the local market just as well as the needs of our clients and combine both to achieve optimum solutions. Our lawyers are Bulgarian qualified and we also have English qualified experts – all of them regularly working on cross-border mandates.

In our work, we focus on M&A, Energy, Projects and Construction, Banking and Finance, Real Estate, Media, IP and IT law, Tax, Employment law, Competition, Procurement and any kind of Dispute resolution, including arbitration and mediation. What’s more, we also take care of the entire legal management of our clients’ projects.

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