Bulgaria’s 2025 Arbitration Act Reform: Transparency at the Cost of Autonomy?

Bulgaria’s arbitration law underwent a significant transformation on 1 August 2025. The amendments – accompanied by a change of name from the International Commercial Arbitration Act to the broader Arbitration Act – introduce new layers of state oversight while making some welcome adjustments in line with international standards.

Although the reform introduces two positive developments – the reinstatement of public policy as a ground for setting aside arbitral awards, and the elimination of certain formalistic requirements concerning the enforcement of foreign arbitral awards – most of the amendments raise serious concerns regarding the autonomy, effectiveness and practical viability of arbitral proceedings seated in Bulgaria.

An overview and critical analysis of the most significant amendments affecting international commercial arbitration is provided below.

Mandatory Registry of Arbitrations

Central to the reform is the introduction of a national online Registry of Arbitrations, operated by the Ministry of Justice as of 3 December 2025. Under art. 4, para. 4 of the Arbitration Act, all arbitrations seated in Bulgaria - whether institutional (including foreign-administered) or ad hoc - must now be registered.

Pursuant to art. 6b of the Arbitration Act, registration requires the submission of detailed information, including the parties’ identities, their addresses, arbitrators’ names and professions, and core procedural documents such as the request for arbitration, the reply, hearing notices, and the award. Although the Registry provides limited public access - restricted to arbitrators’ details and the identity of the administering institution, where applicable, - broad access is granted to public officials, including the Minister of Justice and the Inspectorate to the Minister of Justice and the state courts. Such access raises legitimate concerns regarding the safeguarding of confidentiality, traditionally regarded as one of arbitration’s principal advantages.

According to art. 6c, paragraphs 2-4 of the Arbitration Act, responsibility for registration rests with the presiding arbitrator, who must update the Registry by submitting an application within seven days of each relevant event. The arbitrator may be represented by an attorney in the registration proceedings. Application for the initial registration of the proceedings must be filed within 7 days of the tribunal’s formation. Along with each application, a declaration of truth of the stated circumstances is to be submitted as per an official template. If the registration application is found incomplete or incorrect (e.g. due to lack of sufficient identification details regarding the arbitral institution or required documents, subject of submission, or in case of established inaccuracy of the submitted information) the Ministry of Justice may issue instructions to the applicant to remedy the deficiencies within seven days of notification or even refuse registration by issuing a reasoned decision. The refusal is subject to a two-instance judicial appeal before the administrative courts

A particularly impactful transitional rule - § 25 of the Act Amending and Supplementing the International Commercial Arbitration Act - requires registration not only for new proceedings initiated after 1 August 2025 but also for all arbitration proceedings pending as of that date. This means that no award in pending proceedings may be issued until registration is complete, otherwise the award would be null and void, as outlined below. This has so far resulted in stalling the proceedings until the Registry became functional.

The procedural framework governing the Registry is further detailed in Ordinance of the Minister of Justice as well as State Fees Tariff in force since 3 December 2025.

Nullity of Awards for Registration Non-Compliance

The most controversial amendment is the link between registration and the validity of the arbitral award. Under art. 47, para. 2 of the Arbitration Act, an award rendered by an arbitrator or institution that has not been duly registered is deemed null and void. Nullity may be declared without limitation in time, either:

• ex officio by the Supreme Court of Cassation in set-aside proceedings, or

• through a direct claim, filed by a party to the dispute before the Supreme Court of Cassation.

While intended as a preventive measure against potential abuses, this disproportionate sanction may entail the following serious implications:

• It elevates a procedural formality - registration in a domestic administrative Registry - into a condition for the very existence of an arbitral award. The sanction of nullity is extraordinary in arbitration practice and contradicts foundational principles of finality and limited judicial intervention. By contrast, the Bulgarian regime subjects the validity of an award to compliance with administrative requirements. As a result, an award could be rendered void even where a valid arbitration agreement exists between the parties and the proceedings have otherwise been conducted lawfully, with procedural fairness and in full compliance with the applicable arbitral rules.

• It poses considerable challenges for foreign arbitral institutions and arbitrators administering cases seated in Bulgaria. Furthermore, in order to comply with the registration requirement, reputable foreign arbitral institutions would either have to amend their internal confidentiality rules or apply for registration in breach thereof. Consequently, there is a significant risk that foreign arbitrators or institutions may fail to register the required data within the statutory term under the Arbitration Act.

• It creates legal uncertainty for award creditors and may hinder enforcement. If the Supreme Court of Cassation declares an award null and void, the award creditor would be forced to rely on the debtor having assets in jurisdictions that recognize and enforce awards despite their annulment at the seat. Where non-registration is the sole ground for annulment – being (1) a matter solely of Bulgarian public policy, (2) formalistic and bureaucratic, and (3) a disproportionate sanction – the award should, in principle, be enforceable elsewhere. The permissive wording of art. V(1)(e) of the New York Convention – providing that recognition and enforcement of an award “may” be refused where the award has been set aside at the seat – leaves room for the possibility that an annulled award could still be enforced in exceptional circumstances. However, most jurisdictions adopt a conservative approach: an annulled award is usually treated as legally non-existent, and enforcement is refused based on the principle ex nihilo nihil fit. Consequently, annulment in Bulgaria poses significant risks, as enforcement elsewhere may prove futile either due to the absence of assets abroad or because courts decline to recognize annulled awards.

Administrative Fines for Non-Compliance

Art. 53 of the Arbitration Act also introduces administrative fines for arbitrators whose details are not properly registered. The fines range from BGN 1,000 to BGN 10,000 (approximately EUR 500 to EUR 5,000) and could be imposed in triple amount in the event of a repeated violation (committed within one year after the penalty decree for the initial violation has entered into force).

Stays of Enforcement Without Security

The amendment to art. 48 of the Arbitration Act introduces a substantive shift in the framework governing the stay of enforcement of arbitral awards pending set-aside proceedings. Previously, the respondent requesting a stay was required to provide security equivalent to the amount in dispute. The revised provision enables the Supreme Court of Cassation to stay enforcement without requiring security, provided that “compelling written evidence” exists indicating a potential ground for setting aside.

The absence of objective criteria defining what constitutes “compelling” evidence opens the door to situational, inconsistent and unpredictable case-law. The elimination of the security requirement, traditionally viewed as a safeguard against abuses of stay claims, may erode the principle of enforceability of arbitral awards.

Tighter Rules on Service

Under the amended art. 32 of the Arbitration Act, service of the request for arbitration to respondents in Bulgaria may only be carried out through licensed post or courier, a bailiff, or a notary. Email communications are permissible only after initial service by one of the designated methods and only with the express written consent of the respondent. This marks a departure from widely accepted international practice, in which electronic service is standard and often essential for efficiency.

Furthermore, according to the very vague and contradictory provision of art. 32, para. 7, if service of the request for arbitration or of the notice of the first hearing is unsuccessful, the arbitral proceedings may be terminated upon request of the claimant and the latter may refer the dispute to the competent state court. If proceedings continue, irregular service could constitute grounds for setting aside the award or denying recognition and enforcement.

Although paragraphs 4 and 5 of article 32 provide that documents are deemed served if (i) the respondent cannot be found at its registered office or correspondence address indicated in the agreement; (ii) the respondent fails to collect the documents despite a duly delivered notice; or (iii) the respondent expressly refuses to accept them – these provisions do not cover all practical situations in which a respondent may intentionally evade service. Moreover, mechanisms (i) and (ii) do not apply to initial service of the request for arbitration to individuals. In practice, failed service could effectively render the arbitration agreement invalid.

Positive Developments

Amid the tightening of procedural control and state oversight, certain measures stand out as positive developments.

First, public policy has been reinstated as a ground for setting aside awards in Bulgaria-seated proceedings, restoring consistency with the New York Convention and the UNCITRAL Model Law. This rectifies the unusual position created by the repeal of this ground in 2017, after which public policy was limited to cases concerning the enforcement of foreign arbitral awards issued in proceedings seated outside Bulgaria.

Second, the amendments significantly simplify the recognition and enforcement of foreign arbitral awards. The previous art. 51, para. 3 of the Arbitration Act cross-referenced provisions applicable to the enforcement of foreign state court judgments, which led courts to require notarization of arbitrators’ signatures, apostilles/legalization of the notarizations, and certificates of finality of the awards. The removal of these cross-references has already been endorsed by Decision No. 253 of 22 August 2025 of the Supreme Court of Cassation, which confirmed that enforcement should proceed based on a certified copy of the award and the arbitration agreement, with translations where necessary.

Conclusion

The 2025 amendments mark a decisive shift toward heightened administrative control and procedural oversight of arbitration in Bulgaria. Whether the reform will achieve a workable balance between transparency and party autonomy will depend on the practical functioning of the Registry and the cautious exercise of discretion by the Supreme Court of Cassation. Careful case management and early adaptation to the new procedural landscape will be essential for any arbitration seated in Bulgaria.