Unification of case law in Bulgaria on the right of legal entities to claim compensation for non-pecuniary damage

A fundamental interpretative case regarding the right of legal entities to claim compensation for non-pecuniary damage was initiated in July 2023 and will be heard jointly by the Bulgarian Supreme Court of Cassation and the Supreme Administrative Court. The subject of an interpretative case is always a topic or problem of great importance for law and society on which there is contradictory case law. The right of legal entities to claim compensation for non-pecuniary damage has been disputable in Bulgarian case law for many years.

In some of its decisions, the Bulgarian Supreme Court of Cassation has held that legal entities are not entitled to compensation for non-pecuniary damage, as they cannot suffer physical pain or mental harm, but only to pecuniary damages equal to material or financial damage. In other decisions, the Bulgarian Supreme Court of Cassation and the Supreme Administrative Court have held that legal entities can suffer non-pecuniary damage (such as defamation of good name or reputation) and are entitled to claim compensation for such damage.

In order to overcome the contradictory and inconsistent case law on this issue and to clarify the applicable law, both Bulgarian supreme courts will hear the case and will issue an interpretative decision on the following questions:
•    Does Bulgarian objective substantive law permit awarding of compensation for non-pecuniary damage to legal entities?
•    Does the law of the European Union, which has direct effect and takes precedence over national law (Article 4(3) of the Constitution of the Republic of Bulgaria), or international treaties that have been constitutionally ratified, promulgated and are in force, which form part of the domestic law of the country and take precedence over conflicting provisions of domestic law (Art. 5(4) of the Constitution of the Republic of Bulgaria), provides for the possibility of a national court awarding compensation for non-pecuniary damage to a legal entity for breach of a subjective right recognised by European Union law or by international treaties, and what are the criteria for determining compensation?

The initiation of the interpretative case has a direct impact on many pending court cases with similar subject matters, where the respective judges may suspend the proceedings until issuance of the interpretative decision on the matter. Even if judges do not officially suspend pending cases, each interested party in such a case may request suspension until issuance of the interpretative decision, as it will be of importance for the proper resolution of the dispute. Moreover, the interpretative decision will finally overcome the discrepancy in existing case law and, if positive, it could serve as strong grounds for justification of future claims of legal entities for compensation of non-pecuniary damage before Bulgarian courts.

For more information on the issue’s impact on pending and future court claims in Bulgaria, contact your local CMS expert Antonia Kehayova.

Antonia Kehayova
Counsel, CMS Sofia