Usually after the court award debtor is willing to voluntarily perform its monetary obligation but is prevented from doing so due to lack of the bank account details of the creditor to execute the payment. In particular, the creditors acting in bad faith refuse to provide such information, thereby aiming to additionally deteriorate the debtor’s financial position by initiating enforcement proceedings for collection of the amounts due. The latter will eventually entail payment of additional costs for the enforcement proceedings. Therefore, a convenient option to avoid these adverse effects is the opportunity of the debtor to release itself from liability by depositing the amounts due in a bank, according to Art. 97, para. 1, prop. 2, Obligations and Contracts Act (OCA). Despite the existence of explicit legal provisions on the matter, its practical implementation is persistently and consistently blocked by banks’ refusals to open accounts in favour of creditors for the purpose.
The law’s rationale in the provisions above is to enable the debtor to release himself from its obligation and to prove the creditor’s default.
Creditor’s default will be at hand when the latter:
- does not accept the performance duly proposed by the debtor;
- does not provide due assistance for its performance, when needed.
In the first case, the debtor’s performance should be made conditional on specific actions that to be performed by the creditor, the non-performance of which impede the debtor’s performance. In the second case, the debtor should have offered a proper and accurate execution, but the creditor had unjustifiably rejected it. This refusal may be explicit or presumed for its specific attitude. For example, it is a well-established court practice that if the creditor does not provide the bank account information requested by the debtor or if the creditor does not take any actions for opening one, it is undoubtedly considered a refusal on behalf of the creditor to accept the performance proposed.
The existing court practice states that in order to prove creditor’s default the debtor should prove both for the proposal made to the creditor, as well as the actions performed for the deposition of the amounts to a bank account, including letters of refusal of the bank to open an account on behalf of a third party (Resolution No. 197 as of February 18th, 2014, case No. 666/2012, first commercial section of the Supreme Court of Cassation).
In that context, on a practical level, the following major problems with banks arise:
- Many banks do not even allow opening of a bank account on behalf of a third party. These refusals are illegal because the general provision of art. 2, para. 5 of Ordinance No. 3 of the Bulgarian National Bank (BNB) does not impose restrictions on the opening of bank accounts for persons other than the applicant. On the contrary, Ordinance No. 3 of the BNB explicitly sets out the possibility of bank account opening on behalf of another holder. When a bank account is opened for the debtor’s release from liability, the opening itself does not impose any obligations or adverse consequences for the creditor. The relations between the bank and the debtor are settled according to the legal provisions for agreements in favour or a third party. As well as that, the banks do not express their refusal for the opening in writing, which makes the fact of refusal non-provable.
- Banks providing services for account opening on behalf of a third party impose impossible conditions compliant with their internal rules. Especially, it is the set of data and documents required for the opening in order to identify the account holder and its real owners. The requirement to present specimens of the signatures of the persons who have the right to dispose of the amounts in the account also causes many difficulties. Another ground for refusal is the use and processing of personal data of the account holder without its consent, which creates personal data insecurity.
The caselaw of the Supreme Court of Cassation (“the SCC”) has raised the question whether there is a contradiction between the possibility provided for in the OCA, Ordinance No. 3 of the BNB and the restrictions set by the Measures Against Money Laundering Act (MAMLA). The court resolved that there is no legal obstacle to the opening of bank account in favour of a third, since the MAMLA does not impose any restrictions on the identification of the parties, the grounds for the payment, the origin of the amounts, etc. According to the SCC, there is no contradiction between the possibility of depositing the amounts for the creditor in a bank under the OCA and the requirements under Ordinance No. 3 of the BNB and the MAMLA.
In fact, despite of the above, most of the banks refuse to open accounts in favour of third parties. This is a clear sign that an explicit legal regulation is necessary, as the present regulation in force still poses practical uncertainties and inconsistencies. Considering the existing practices, the courts should take into account the banks’ refusals, including those which are not expressed in writing, as relevant circumstances for the debtor’s liability.
Unless there is a legislative amendment or a change in the case law, the debtor’s right to benefit from the creditor’s default remains virtually blocked, along with the progressively rare chance of opening bank accounts on behalf of foreign citizens.
