With State Gazette No. 11 of 02.02.2023, changes were adopted to the Law on Mediation and the Civil Procedure Code, which introduced the institution of mandatory mediation in certain types of disputes. The changes aim to reduce the workload of the courts and ensure an out-of-court and expeditious resolution of the dispute by mutual agreement, as well as to save part of the costs for the parties.
The changes come into force from 01.07.2024.
I. How will the mediation procedure be organized?
A judicial mediation center with territorial divisions to the regional courts will be established at each district court. These centers will organize the mediation procedures.
The structure and organization of the activity of the judicial mediation centers will be determined by the Supreme Judicial Council, which brings the procedure into the lap of the judicial power, as in fact the mediation, when it takes place, will be the “first instance” for certain disputes. “First instance” remains in quotation marks because the parties will continue to have the option of standard three-instance court proceedings if they consider that mediation is not an appropriate tool for resolving their dispute.
It is important to note that the parties are only required to participate in a first meeting lasting one to three hours. Once this meeting is held, the disputing parties can decide whether they wish to proceed with mediation or whether they wish to proceed with litigation.
Given the mandatory nature of the institute, the mediation procedure is exempt from state fees for the first meeting described above, lasting from one to three hours.
In the event that the procedure ends with the parties reaching an agreement, it can be in written form or in the form of a court settlement pursuant to Art. 234 of the Civil Code, with the court ruling within 7 days of submitting the application.
The mediation procedure can have a maximum duration of 2 months from the beginning, and this period can reach up to 6 months by agreement of the parties. A mediator can be a person with a legal education who meets the legal requirements to exercise the activity.
II. In which cases is mandatory mediation provided for?
The changes provide for the following two hypotheses of mandatory mediation:
1. Cases in which the court is obliged to oblige the parties to participate in a first meeting in a mediation procedure, namely:
a) distribution of the use of jointly owned property under Art. 32, para. 2 of the Law on Property;
b) monetary claims arising from co-ownership under Art. 30, para. 3 and Art. 31, para. 2 of the Law on Property;
c) division under Art. 34 of the Law on Property – in the proceedings for carrying out the division /second phase/;
d) fulfillment of obligations of the owners, users or residents of independent objects in a building in condominium regime under Art. 6 of the Condominium Management Act, for reimbursement of costs incurred by an individual owner for the repair of common parts of the building under Art. 48, para. 7 of the Condominium Management Act, as well as for the annulment of an illegal decision of the general meeting or an illegal act of the management board (manager) of the condominium under Art. 40, para. 1 and Art. 43, para. 1 of the Condominium Management Act;
e) payment of the value of a company share upon termination of participation in a limited liability company under Art. 125, para. 3 of the Commercial Law;
f) liability of a manager or controller of a limited liability company for damages caused to the company under Art. 142, para. 3 and Art. 145 of the Commercial Law.
2. Cases in which the court may, at its discretion, oblige the parties to participate in a mediation procedure, namely:
a) divorce under Art. 49 of the Family Code;
b) resolution of disputes regarding the exercise of parental rights, the place of residence of the child, personal relations with the child and his maintenance under Art. 127, para. 2 of the Family Code;
c) amendment of the measures related to the exercise of parental rights, the place of residence of the child, the personal relations with the child and his maintenance under Art. 51, para. 4 and Art. 59, para. 9 of the Family Code;
d) resolution of disagreements regarding the exercise of parental rights and obligations under Art. 123, para. 2 of the Family Code;
e) determination of measures for personal relations with the grandparents under Art. 128 of the Family Code;
f) maintenance;
g) monetary or non-monetary claim arising from a contract, one-sided transaction, tort, unjust enrichment or carrying out another’s business without a power of attorney with a claim cost of up to BGN 25,000;
h) existence, termination, destruction or annulment of a contract or a unilateral transaction or for the conclusion of a final contract with a claim price of up to BGN 25,000;
i) ownership and other real rights over property or for disturbed possession;
j) remuneration or benefits arising from employment relationships, as well as for recognition of the dismissal as illegal and its cancellation and for the restoration of the previous job;
k) protection of membership rights in a commercial company under Art. 71 of the Commercial Law or to cancel a decision of the general meeting of the company under Art. 74 of the Commercial Law, as well as claims under Art. 58, para. 1 of the Law on Cooperatives and under Art. 25, para. 4 of the Law on Non-Profit Legal Entities;
l) protection of intellectual property rights under the Copyright and Related Rights Act, the Patent and Utility Model Registration Act, the Trademark and Geographical Indications Act, the Industrial Design Act, the Integrated Circuit Topology Act and the Protection of new varieties of plants and breeds of animals.
3. The legislator also provided for exceptions – cases in which, although the prerequisites for mandatory mediation are present, the court does not oblige the parties to participate in it, namely:
a) the mediation procedure is excluded for the relevant type of dispute by law;
b) the first notice in the case was not delivered to the defendant personally or through another person in the cases provided for by law, unless it is discovered later in the course of the proceedings;
c) the defendant admits the claim;
d) party to the case is the state or a state institution;
e) a party to the case is a consumer, with the exception of claims for receivables arising from a bank credit contract or related legal relationships, as well as from a property insurance contract;
f) in the case, convincing evidence has been presented of violence committed against a party in the case by the opposite party, of the existence of a risk to the life or health of the child or to his best interest.
III. Special rules for mandatory mediation.
The parties may be required to participate in a mediation procedure at any time from the expiration of the time limit for submitting an answer to the claim until the conclusion of the court proceedings. The parties may be required to participate in a mediation procedure only once in the proceedings, and if the first-instance court failed to direct the parties to participate in one, the appellate instance shall oblige them to do so, if there are prerequisites for this.
Author: Ivan Fregulia
