When an individual or a legal entity (a sole proprietor including) is accused of committing an administrative violation, they are subject to a procedure that typically involves two main stages:
- Establishment of the violation – the individual/ legal entity is served with a statement for establishing of administrative violation (“SEAV”);
- Imposition of the respective sanction (such as public censure, a fine, temporary disqualification from practicing a certain profession or activity, or community service) – the individual is served with a penal decree (“PD”).
The general procedure for issuing these acts, as well as the available defences against them, is regulated by the Administrative Violations and Sanctions Act (“AVSA”). The provisions of the AVSA do not apply where a special law provides otherwise. The specifics of other procedures (under the Labor Code, the Customs Act, etc.) require separate consideration.
Therefore, this article focuses specifically on the AVSA.
The individual/ legal entity may submit objections to the SEAV and appeal the PD. However, the AVSA also allows for an alternative defence strategy – concluding a settlement agreement. This could result in a faster resolution of the proceedings, avoidance of a harsher sanction, and reduced reputational or financial consequences for the offender.
It is a matter of factual and legal assessment whether, in a given case, concluding a settlement agreement is beneficial for the individual/ legal entity. However, undoubtedly, understanding the meaning of the settlement agreement and the procedure for concluding it provides an advantage when choosing a defence strategy that best serves the interests of the individual/ legal entity with served SEAV.
1. What is a settlement agreement?
It is a procedural opportunity to terminate the administrative penal proceedings by imposing the minimum fine under the AVSA, provided that an agreement is reached on the following issues:
- whether an act has been committed,
- whether the act constitutes a violation and its legal qualification,
- whether the act was committed by the individual/ legal entity under the SEAV, and
- whether the act was committed culpability.
2. Who can propose the conclusion of a settlement agreement?
The settlement agreement is to be concluded before the expiration of the one-month period under the AVSA for imposing a sanction, upon proposal by:
- the sanctioning authority – within 14 days from receipt of the case file;
- the individual/ legal entity – within 14 days from service of the SEAV.
Issuing a PD without a prior proposal does not constitute a substantial violation of procedural rules.
3. When is the conclusion of a settlement agreement inadmissible?
A settlement agreement is not admissible:
- for a repeated violation;
- for a violation committed within one year from the entry into force of an act imposing an administrative sanction on the offender (excluding cases of repeated violations), or for which a warning for the same type of violation has been issued;
- if the act for which the SEAV has been issued constitutes a crime, unless the proceedings before the sanctioning authority were initiated after the prosecutor’s refusal to initiate criminal proceedings;
- when the acknowledgement of the individual/ legal entity is not supported by the evidence collected in the case file.
4. What does the settlement agreement contain?
The settlement agreement contains:
- the date of conclusion;
- the full name and position of the sanctioning authority;
- the full name of the offender, address, PIN/ date of birth, and other data provided by the AVSA;
- the date of the SEAV, and the name, position, and workplace of the officer who drew up the act;
- a description of the violation, the date and place where it was committed, the circumstances under which it was committed, as well as the evidence confirming it;
- the legal provisions that were culpably violated;
- the type and amount of the administrative sanction;
- items confiscated in favour of the State;
- the disposal of the physical evidence;
- the bank account to which the due fine shall be paid;
- the signatures of the sanctioning authority and the individual/ legal entity.
When a SEAV is drawn up for several violations, a settlement agreement may be concluded only for some of them – the admission of one violation cannot be used as evidence of the guilt of the individual/ legal entity for the other violations under the AVSA.
5. What are the amounts of the sanctions? How is the fine paid, and what is the legal effect of payment?
If the sanction is a fine (whether imposed alone or alongside another sanction), its amount is determined as follows:
- if a minimum or fixed amount is provided – 70 % of the minimum or of the fixed amount set for the specific violation;
- if no minimum is provided – no more than 70 % of half of the maximum amount.
Other types of administrative sanctions are determined according to the general rules of the AVSA.
When the settlement agreement imposes a fine, the person agrees to pay the fine within 14 days from the date of conclusion of the settlement agreement.
The settlement agreement enters into force on the date of its signing, and if a fine is imposed, it enters into force on the date of payment of the fine. The settlement agreement is final and has the same legal effect as an enforceable PD.
If the fine is not paid within the specified period, the sanctioning authority shall issue a reasoned decree declaring that the settlement agreement has not been concluded. This decree is not subject to appeal or protest. The authority then issues a PD but cannot use the prior acknowledgement of the individual/ legal entity regarding the violation, culpability, or any other agreed elements of the drafted settlement agreement.
6. How is the confiscation of items in favour of the State and the handling of physical evidence regulated?
The regime for confiscation of items in favour of the State cannot differ from the general procedure set out in the AVSA.
Where the settlement agreement involves the handling of physical evidence or the confiscation of items in favour of the State that do not belong to the individual/ legal entity, written consent from the rightful owner of the items is required. This consent becomes an integral part of the settlement agreement. If the owner refuses consent or cannot be located, the sanctioning authority shall rule on the confiscation and handling of the physical evidence by issuing a PD, which is subject to appeal under the general procedure before a court.
The present article is for information purposes only. It is not a (binding) legal advice. For a thorough understanding of the subjects covered and prior acting on any issue discussed we kindly recommend Readers consult Ilieva, Voutcheva & Co. Law Firm attorneys at law.
