By Decision № 4 of 20.04.2021, the Constitutional Court of the Republic of Bulgaria declared unconstitutional the provision of § 2 of the Transitional and Final Provisions of the Act for Supplementation of the Act on Obligations and Contracts (promulgated, SG No. 102 of 1.12.2020). This means that a 10-year absolute statute of limitations for debts of individuals will start running for the existing debts from June 2, 2021.
Chronology of events
With the promulgation of the Act for Supplementation of the Act on Obligations and Contracts in SG, issue 102 of 01.12.2020, the institute of absolute prescription was introduced in Bulgarian law (Art. 112 of the Act on Obligations and Contracts). According to § 2 of the Transitional and Final Provisions (TFP), “For existing cases the statute of limitations under Art. 112 shall run from the day on which the claim becomes due. In the case of pending enforcement proceedings, the limitation period shall begin to run from the first enforcement action, and when such is not instituted – from the day of entry into force of the act by which the claim is recognized. ”
This provision has the effect of applying the norm of Article 112 of the Act on Obligations and Contracts not from the moment of its entry into force, as is the general rule in the Constitution, but from the date preceding that day: the day on which the claim became due, the day of the first act on the execution or the day of entry into force of the act by which the receivable is recognized. Pursuant to § 3 of the TFP, the law enters into force within 6 months from the day of its promulgation in the State Gazette on 02.06.2021.
Consequences of the decision of the Constitutional Court and reasons for its ruling
The result of the declaration of the unconstitutionality of § 2 of the TFP is that the absolute statute of limitations for all monetary obligations of citizens, which are not deferred or rescheduled and are not one of the 8 exceptions listed in Art. 112 Act on Obligations and Contracts, regardless of when they arose and became due, will begin on June 2, 2021.
Among the main motives of the judges who supported the decision is that the declared unconstitutional rule violates the principles of legality, legal certainty, predictability and stability of the legal order, as it introduces three different starting points, from which the statute of limitations for existing cases begins to run, which do not even cover all the hypotheses in which the limitation period begins to run.
Additionally, the rule of § 2 of the TFP is not aimed at a legitimate aim of constitutional order, because the right of persons who have placed themselves in the role of debtor by impoverishing other persons, their creditors, to be forgotten, to stop being “perpetual debtors” is not a constitutional right.
Considerations are also set out in connection with the right of ownership, which includes the possibility to collect the receivable. The decision clarifies when the expropriation of private property is permissible and that the case is not among them, as § 2 of the TFP inadmissibly denies the legal effect of the actions of those creditors who proceeded to protect their rights.