Bulgaria’s full membership in the European Union presents a number of challenges across all areas of the country’s socio-economic and political life. Successful integration into the EU requires considerable efforts from public institutions, businesses and citizens alike. The advantages of arbitration over court litigation, as demonstrated in practice, include speed, transparency, cost-effectiveness and confidentiality.
At present, arbitration is primarily used in the field of private law, particularly in relation to commercial disputes. It is governed by the applicable Bulgarian legislation and has a long-standing tradition in the country. The principal advantages of arbitration proceedings are as follows:
- Avoidance of the jurisdiction of state courts. The parties entrust their dispute to a non-state adjudicatory body in which they have confidence, rather than referring it to the ordinary courts.
- Party autonomy in the appointment of arbitrators. The parties participate in the constitution of the arbitral tribunal by selecting the arbitrators who will decide their dispute.
- Procedural flexibility and simplicity. Disputes are resolved under a streamlined procedure known to both parties in advance. The parties may agree to modify the procedure and adapt it to the specific circumstances of their dispute.
- Speed of proceedings. One of the major advantages of arbitration is the speed with which disputes can be resolved. Arbitration proceedings generally take place at a single instance, without the ordinary appellate process. Cases are concluded within a maximum period of six months.
- Finality and enforceability of arbitral awards. Arbitral awards are final and binding and may be complied with voluntarily. They offer a high degree of legal certainty, as the grounds and procedures for challenging them are limited by law.
- Cost-effectiveness. Arbitration proceedings are more economical. The arbitration fee is not calculated at a fixed percentage of the claim; instead, the applicable rate decreases as the amount in dispute increases. Legal representation, expert witness and translation costs, among other expenses, are incurred at a single instance.
- Privacy and confidentiality. Arbitration proceedings are conducted in private and are confidential, helping to protect sensitive business information and prevent further deterioration of relations between the parties.
- International reach. Arbitration is not subject to the same jurisdictional limitations applicable to state courts in international disputes.
- Avoidance of foreign litigation. A party that has duly performed its contractual obligations may avoid the necessity, inconvenience, expense and potential disadvantages of bringing proceedings against a defaulting party before a foreign court.
- Preservation of business relationships. Since both parties have voluntarily agreed to submit their dispute to arbitration, there is a greater likelihood that they will be able to maintain their existing business relationships.