The amendments to the Obligations and Contracts Act (OCA), which were promulgated in the State Gazette, issue # 102 of December 1, 2020, are an instrument amending the statute of limitations (also known as a prescriptive period) and targeted specifically at debtors – natural persons. These amendments became effective on June 1, 2021, drawing great public attention. However, the amendments have provoked some legal experts to express their concerns regarding certain aspects primarily related to their implementation, and especially doubt as to whether the provisions are in tune with the Constitution of the Republic of Bulgaria.
Which are the cases when the amendments to the OCA will be applied?
The new Article 112 of the OCA is basically an attempt at introducing an absolute prescription period to be applied to monetary claims against individuals. It provides for that “upon the expiration of the ten-year statutes of limitations, any monetary claims against individuals are extinguished by prescription, regardless of any suspension or interruption of the statutes of limitations, except when the obligation has been deferred or rescheduled”. The interpretation of the Article 112 has been widely perceived as “salvation” for the “eternal debtor”.
Which are the cases when it will not be possible to invoke the Article 112 of the OCA?
It is important to note that the provisions of the Article 112 are not a “panacea” for any and all of the debtor’s obligations. As many as eight cases do not provide for the application of “absolute statutes of limitations”.
Why the new amendments to the OCA have stirred controversy?
In particular, whether the newly introduced statutes of limitations are “absolute” is a topic which many renowned civil law scientists have expressed their opinions about. But, according to some views, the provisions of the Article 112 of the OCA will create more problems than they will solve. Allegedly, both debtors and creditors will be affected. There are opinions according to which the “absolute statutes of limitations” can easily be circumvented meaning that their regulatory provisions will become meaningless.
The fears that § 2 of the Transitional and Final Provisions to the Act amending the OCA will have serious implications have not stayed in the realm of theoretical controversy. At the request of the Supreme Bar Council (SBC), the Constitutional Court have initiated Constitutional Lawsuit № 1/2021 regarding the alleged unconstitutionality of the provisions. The provisions being attacked state that “for any existing cases the statutes of limitations under the Article 112 shall run from the day when the obligation becomes due for fulfilment. In case of pending enforcement proceedings, the statutes of limitations shall run from the first enforcement action, and if no enforcement proceedings have been initiated – from the day when the act recognizing the claim becomes effective.” The Supreme Bar Council (SBC) is of the opinion that the “absolute statutes of limitations are given retroactive effect by virtue of § 2 of the Transitional and Final Provisions to the Act amending the OCA, because the ten-year absolute statutes of limitations will start running not from the effective date of the amendments but from a date preceding the effective date, and thus receivables which are currently due will be deemed already extinguished by prescription at a past moment, or a minimum period will be sufficient to allow the receivables to be extinguished. This will be tantamount to “instantaneous” extinguishing by prescription which is intolerable and contradicts the very idea that the prescriptive period is a period of time.”
We will soon find out whether the absolute statutes of limitations have a rescue effect or are more of a trouble for the debtor and the creditor alike. Our team will keep you informed about any news on this topic. Meanwhile, feel free to send us your queries.
