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THE BULGARIAN LEGAL MYSTERY

A route for a save passage

By Valentin Braykov

Ladies and Gentlemen,

My name is Valentin Braykov. I have been a lawyer since 1976 so nearly 30 years and I currently manage one of the Sofia law firms. If I have to label myself I would say I am an ordinary legal soldier from battle rooms in court having smelled a lot of litigation gunpowder. So what I am telling you is my personal observations for the last 15 years, I represent nobody except myself and I am speaking only on my own behalf.

What I can offer you is an insider look into what some call The Bulgarian Legal Mystery and some suggestions for a safe passage through it. By Legal Mystery I mean the shocking headlines of 65 unresolved assassinations, billions of public assets abused and unpunished, not a single drug baron behind bars, the president of a major court driving a stolen car and only last week journalists cheated a notary in a mocking sale of the official limousine of chief prosecutor. And all this in a country which 15 years ago was so uneventful and even boring where one was anxious to see fiction movies featuring such actions. Now reality seems to have overrun the fiction.

Perhaps the explanation should start from the outlook of the Sofia Palace of Justice. There is a kind of a double sphinx there allegedly holding the key to the mystery. These are two statues of lions, two majestically walking lions on both flanks of the palace of justice. But when you throw a second glance on the two marble animal kings you may notice that they walk in a totally different way. The right lion has stepped in a symmetric way with both right legs moving forward whereas the left lion has stepped in an asymmetric way-like a man does when creeping on four limbs. One of the two lions steps the wrong way, they are obviously from different battalions with different marsh music. So the symbol of discrepancy in law enforcement can hardly be more conspicuous.

There are some explanations for this regretful status-quo and I can list five of them:

The first factor is the impossible speed by which Bulgaria was forced in recent years to adopt new laws. It was almost like changing a plane in the air. Reception of foreign legal models is not new in Bulgarian history.

First time it happened back in the 9th century when our kingdom had to adopt new Christian laws. It took us more than 100 years to accommodate those new provisions and at that time nobody asked us whether we were ready or not for accession to Christianity. Bulgaria put the legal questions and Constantinople and Rome competed with the answers. The responses of the Vatican to the Bulgarian legal questions made up the famous document of early Catholic law called “Responsa Papae Nicolai I ad Consulta Bulgarorum” in November 866. But as I said it took another 100 years to fully adopt and enforce that ancient Christian Acquis.

The second time Bulgaria was confronted with massive reception of foreign laws was after the liberation from Turkey in 1878 till World War I. These were nearly 40 years for transplantation of the continental legal system to Bulgaria. It started with the Constuitution. The Russian administration was clear that the only way to perperuate Russian influence was to bet on the gratitude of wide popular masses and hence to opt for a democratic constitution.That is how the Belgian constitution was chosen as a model for Bulgaria. But as I said this second wave of legal adoption took about 40 years and with no rush.

The third campaign of drastic legislation import was after World War II between 1945 and 1955 when Bulgaria was traded, betrayed and sacrificed to the Stalinist tiger though we never fought the allies and we saved our Jews from concentration camps. In those 10 years Soviet legal models were injected all over Bulgarian law. However it is fair to concede that at the climax of Stalinist terror, that is between 1948 and 1952, Bulgaria passed its 4 best civil laws : Law of Inhertitance, Law of Obligations and Contracts, Law of Property and the Civil Procedure Code. All those communist civil laws, though slightly amended, are still in force today. Yet it was a matter of 10 or more years to make the legal transition to a state guided economy.

Now we are having the fourth historic influx of foreign laws- those of the European Union. Unlike previous receptions this time the arriving European laws are like a legal slide- biggest in numbers, within the shortest term of 3 to 5 years and changing the whole panorama. Even with the best will the country has no absorption time for so many new laws, the system has been overwhelmed and crushed. It is like pumping water into the mouth of a drowned man. This is the first and main reason for the current Bulgarian legal drama.

The second grave factor out of control is the sharp discrepancy between the amount of legal provisions and the capacity of the state to enforce them. The equasion between laws and enforcement capacity is not a part of the local government culture. Laws are being passed and published like printing money without value. Bulgaria has a monetary board but it needs more a legislative board to stop printing laws without enforcement cover. And as every common sense restriction to power this one too it is not welcome on the top.

The third negative legal factor is the worldwide contradiction between the speed of entering into a contract- electronically it takes just a second to sign and the years needed to complete a court dispute on same contract. The economy does not tolerate such a crisis disparity between a business relation and its remedy and that is why short cuts are looked for.

The next three stumbling blocks to legal efficiency were home made. The system of courts was changed from two instance to three instance. The adjustment and tuning of this major operation took about 10 years. To contrast communism, judiciary was made so independent that some magistrates started thinking division of powers meant shares in power. We painfully rediscovered the Columbus rule that he who goes too far to the west will certainly turn up in the east.

Another home-made blow to the judicial system was opening the access to the bar for any law graduate. No special requirements, no entry exams. As a result within a few years the profession grew in numbers from 2000 to over 12000 i.e. a six fold increase. The legal profession was deliberately turned into a dumping ground for failed politicians, former magistrates and dismissed civil servants. The Open door policy ended up as a No walls reality.

And the cherry on the cake was that in five years the number of law faculties in Bulgaria grew from one to ten. Ten law faculties in a country which has academic assets for just one. Every year of the ‘90s those ten law faculties pumped into the system over a thousand law graduates, a poorly educated legal militia which fiercely attacked the positions in courts, prosecution, investigation, notaries and administration. The results are widely known, they make the headlines I mentioned at the start.

I tell you all these stories in such details to reassure you that we know fairly well by what steps Bulgarian law enforcemenmt went into the wrong direction and how they should be precisely undone. Having hit the rock bottom there is a sense of stress and shame in the nation to rush back to the right track of European legal standards. The recovery has already started though it is not all visible on the surface.

First, the number of law faculties has been reduced from 10 to 3 with uniform programs and teaching staff. The educational source of pollutrion has been largely switched off.

Then, under the new law of the legal profession, applicants to the bar must pass quite harsh written and oral exams to make sure no amateurs join the guild. This last November 70% of the candidates failed at the admission exams of the bar. Same approach is relevant for notaries and junior judges- which is good news.

The risk of a too long litigation is being tackled by introducing fast track procedures, limiting the appeal options to one and tightening the rules for serving summons. Still a long way to go but one can mitigate the litigation risk by referring a dispute to foreign law and arbitration. Choice of foreign law and court is the main vaccine against litigation concerns. And seen from the other side: the acceptance of local law and local courts by foreign investors is the best index for recovering confidence in Bulgarian law and order.

My frank opinion is that the so called judicial reform has to start outside the legal system. We have to cut the influence of the political establishment on the judiciary. This is the source of poison- the political pressure on institutions of justice. I have no time to say how it works but the priority of every ruling team is to ensure immunity and irreversibility of its major discretions, deals and decisions related to money. So it is their basic instinct to turn justice from watch-dog into a

watch-pet. If the EU means business in that respect it should sharply react to the ongoing political poker for choice of new supreme prosecutor next February. I can also hardly understand why European monitors tolerate the statutory provision that acting Bulgarian members of parliament while in office can appear in court to litigate and defend cases. How should a judge feel if a front bench MP represents a Mafioso in court and challenges the judge that he the MP as author of the law meant this and not that when drafting the law?

Now I can offer you some practical suggestions which may help you decide whether to invest or not to invest in Bulgaria.

1. Is there anything that you can uniquely offer to this anxious and fast growing market? If your product is not used or known on this market, can you teach Bulgarians to need your product ?

2. You have to answer yourself whether you are looking for a business romance or for a hard but rewarding challenge? If you seek a romantic lagoon please better stay at home. What it takes here is courage, adventure, some rough rodeo and treating risks as opportunities

3. If I have to use a medieval metaphor investing in Bulgaria is like a knights’ tournament. The rewards are some sleeping beauties of the economy waiting for a foreign investor’s kiss to wake up and give you more than you expect- look at infrastructure projects, mineral water supplies, agriculture, tourism, heritage sites. Bulgaria is the home of the world’s oldest gold treasure – some 5000 years before Christ plus archaeological sensations every year. Only three months ago they found another ancient Thracian tomb with several thousands golden objects. I wonder who will be the first to invest in the tourist infrastructure around such a sensation- like the Japanese are doing in Northern Greece around the palace of Alexander the Great.

4. Once your curiosity in Bulgaria has grown into a serious business interest, please talk to someone you trust who has succeeded in Bulgaria and even more important- to someone who has failed and lost. And learn from their experience.

5.We strongly suggest that before sending your investment money

here you get at least two written opinions just on two points: the fraud exposures and the corruption exposures related to your project. Something like a due diligence report on your specific risks of fraud and corruption and I mean due diligence, not due negligence. In this respect it is a common mistake to rely on the shiny advice from famous international consultants who copy and paste stories from other markets. What you need is a local Tarzan to tell you that while in your native forest snakes may be crawling on the ground, in this forest they may be hanging from the trees. For me an easy way to assess a consultant is by checking how often he uses conditional mood in his speech. You need a responsible pilot to take your ship through the bay and so don’t waste your money on “would be, should be, might be, in case, provided, if and whether, we cannot rule out but we remain on a stand-by, sit-by and lay-by”.

6. The next step we recommend you is to choose your Bulgarian lawyer. I am probably breaking professional confidentiality by disclosing that the secret symbol of the Bulgarian legal profession is the Condom. It sends the sharp message that using a lawyer makes sense before the action rather than after. I told you earlier that in the last 15 years the Bulgarian bar has been flooded with members of unequal standards.

There are two brands of lawyers that you should treat with caution:

The first brand are those lawyers who present themselves as having excellent connections with the decision makers in power and with top judiciary. They can even arrange a high level hand shake for you. Please be aware that some of them might be corruption brokers. You should not do anything that you cannot explain in public because publicity is the only weapon against corruption pressures. If you concede once you become their hostage forever.

The second brand of lawyers to be treated with caution are those from the shiny legal directories where some of them pay to be featured as best western. In Bulgaria we say that great lovers and great lawyers are not advertised- they are only whispered about. Claiming to be a big law firm of 50, 100 or more lawyers in Bulgaria is also a trick to make you feel at home and stay. You can be absolutely sure that in this small legal lake there are no whales.

My favorites are the humble litigation lawyers who defend court cases every week, who do not operate from luxury offices but whose fees are quite reasonable. They have an unrivaled flexibility of mind and can deliver in court what they have advised in private. Such colleagues know well that the relationship between the law on paper and the court case is similar to the difference between a romantic poem and a real love affair.

7. And three minor notes about your Bulgarian staff.

First, if you want to make it a fighting team, please put some personal touch when talking to them. The Slavonic soul expects something more than the usual daily exchange “How are you today ? – Fine, thanks and you ?”

Second, you should remember that for the vast majority of Bulgarians the European Union is more of a religion than a rational choice. They know almost nothing specific and are already suffering from huge price increases explained by EU commitments.

And third, this nation still suffers from an adoption complex- looking for a great power mother, father, big brother, sister to patronize it. It is healthy for Bulgarians to see success coming from a country similar in size and population.

So at the end of the day you look at the Bulgarian glass wondering whether it is half full or half empty. My advice is to cut short that observation and to drink the glass- like many others have and enjoyed. I drink it every day and I am still alive. If the climate is definitely getting warmer you should not wait for all icebergs to melt down in order to set sail- just watch them and avoid them.

Bulgaria needs Belgium as a friend not for its money but because Belgium is an inspiring example for us that a small country can be great even without being too strong.

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