Specifics on ship arrest in Bulgaria (Varna and Bourgas)

ship arrest in BulgariaАrresting a ship is a way to secure a maritime claim, while the claimant initiates the claim proceedings. We have described the procedures for ship arrest in Bulgaria before, but here we will clarify some prerequisites, necessary for the ship arrest. At MH Legal, we advise any claimant who will initiate a ship arrest to prepare the following minimal set of documents:

[list3]

  • Proof of registration for the claimant
  • Proof of registration of the defendant
  • Proof of service delivery
  • Notice for payment

[/list3]

Existing entity

The above four points are essential for a successful ship arrest in Bulgaria. These evidence are necessary to convince the court that there are two parties, which exist in their respective jurisdiction. The court can't initiate a case against non-existing entity. Therefore it's essential to have those documents beforehand. An apostille on those documents is required unless, the parties' place of registration is a country, which have signed bilateral agreement for legal aid with Bulgaria.

Proof of service delivery

Arresting a ship is available as a security for maritime claims. An exhaustive list of the types of maritime claims can be found in Geneva Convention on ship arrest from 1999 [original text], on which Bulgaria is signatory. Whether it will be bunkering or other ship maintenance services, there need to be a proof a service delivery when you apply for ship arrest court order.

Notice for payment

Normally after rendering the service, the claimant should have issued an invoice to the bareboat charterer or to the shipowner. Every invoice should have a term for payment, after expiry of which, the invoice is overdue. However if there is no date, a notice for out-of-court payment should be made. In such situations, email correspondence is the normal way of delivering such notices.

Initiating the ship arrest

We, at MH Legal, can initiate the ship arrest the same day, the documents are provided to us by email. After submission, the judge can issue the  ship arrest order in one day, unless a deposit or additional clarifications are required. Should you have a ship arrest request, please contact us on +359 52 605997 or email us on milen@mhlegal.eu

EU operator's licence from Bulgaria: 2015 updates

operators licence bulgaria 2015 rulesAs transport lawyers, we've been watching very closely the updates in the Bulgarian and European road transport legislation and the operator's licence regime in particular. The trend in all EU countries is governments to put more pressure on international hauliers, in order to protect the local ones. Luckily, European legislation is not that easy to go around. This means that you will continue to benefit of being holder of Bulgarian Operator's licence for transport of goods for hire and reward. We are happy to announce that we continue to provide operator's licence services in compliance with the new changes in the law.

Operator's licence requirements in 2015

In July 2014 the Bulgarian parliament adopted a change to the Road Transport Act, where they impose more stricter measures against 'renting' truck authorisations. Apparently there has been a pressure from Western Countries, who complained that a lot of hauliers who don't fulfil EU O licence requirements, use truck authorisations from other companies.

The government measures include thorough checks by Transport Agency inspectors whether the hauliers fulfill the requirements of Article 3 of Regulation EC/1071/2009 , where a haulier should:

[blockquote]

(a) have an effective and stable establishment in a Member State; (b) be of good repute; (c) have appropriate financial standing; and (d) have the requisite professional competence.

[/blockquote]

The requirement in letter (a) is the one, which the inspectors are particularly after. There have been a lot of Belgian and Dutch companies, who got O licence from Bulgaria, but they were either ill advised by general practice lawyers or even worse - they got the O licence with the help of non-professional. This was relatively easy to be done 3 years ago, but the Transport Ministry tightened the rules, especially with the last legislation amendment from July 2014.

Effective and stable establishment of an haulier in Bulgaria

So what does it mean? In summary this means that during any preliminary and interim check by Transport Agency inspector, your company need to provide satisfactory information that it is properly established in Bulgaria. The company needs to have all legally required facilities, such as operating centre etc. The company needs to have a proper office with all the company and operations paperwork available in this office anytime. Last but not least - the vehicles need to be registered in Bulgaria and either owned or rented/leased from another Bulgarian company. The abovementioned Belgian and Dutch companies were all having Belgian and Dutch registered vehicles under the Bulgarian licence, so they will have their licences revoked unless they register the trucks in Bulgaria and satisfy the establishment requirement.

Number of issued authorisations should match the number of the operated Bulgarian vehicles

This is the second big amendment which was adopted in the Road Transport Act last summer. Тhe Road Transport Agency now has a vehicle register, where they record the number of authorisation issued and matches this number against the vehicles every operator's licence holder operates. The practical issue here is that you can't apply for extra authorisations, unless you show that you own/rent/lease a Bulgarian registered vehicle, which is not used by another company/person.  The Agency checks in their register every time you apply for extra truck authorisation.

Easy Operator's licence solution from MH Legal

Because we watch closely the legislation updates, we are prepared with solutions to every legislation problem. We provide to all our existing and future clients a no-hassle-business-model, where you concentrate on your haulage business whereas we do all the legal compliance work for you. We have helped many UK and Irish hauliers to establish transport companies in Bulgaria so they not only save money but also have become more competitive on the European haulage services market. Call us or email us for to get your Operators licence from Bulgaria now.

Ship arrest in Bulgaria: Varna and Burgas Black Sea ports

Ship arrest in Varna and Burgas black sea portsThe ship arrest procedure in Bulgaria can be done in one of the two Bulgarian Black Sea ports - Varna and Burgas. The legal regime of the ship arrest is subject to the regulation of two main legal acts, effective in Bulgaria:

[list2]

[/list2]

Executing a commercial ship arrest in a Bulgarian sea port

Pursuant to the International convention, the ship arrest in Bulgarian sea port can be executed against a commercial ship only, regardless the flag under which it is registered under. A ship arrest cannot be executed against a government owned ship or non-commercial ship. 

The ship arrest procedure can be done both as a preliminary security for a non-filed maritime claim or as a security measure for entered into force court decision. The latter case has its specifics, relating to whether Bulgaria has bilateral treaty for mutual recognition of legal acts. Each case should be assessed separately.

With regard to the first case, mentioned above, the ship arrest can be executed as a lien or injunction, which will secure the maritime claim against the ship owner or any third party who operates the ship.

Legal grounds for ship arrest

The legal grounds for execution of ship arrest in Bulgaria are listed in Article 1, point 1 of the Ship Arrest convention 1999. These are all possible maritime claims, stipulated and defined by the convention. The most common would be claims for goods, materials, provisions, bunkers, equipment (including containers) supplied or services rendered to the ship for its operation, management, preservation or maintenance; claims for construction, reconstruction, repair, converting or equipping of the ship; claims for port, canal, dock, harbour and other waterway dues and charges etc.

Starting the procedure for ship arrest

The ship arrest procedure starts with an application to the local District Court, where the ship is currently located. For Bulgaria these are Varna District Court and Burgas District Court. The application should be legally grounded and should enclose all the documents, proving that the ship arrest will be justified. Sometimes the District judge will require a payment of refundable deposit, which will be returned upon successful maritime claim.

The ship arrest court order will be issued within 3 days as of application submission. The execution of the ship arrest order is done by the captain of the port, where the ship is located.

Filing the maritime claim

The ship arrest is just security for the maritime claim. Following the common rules of the Civil Proceedings Code, the judge will give the claimant 30 days after the ship arrest order is issued, to file its maritime claim. The Merchant Shipping Code allows the Bulgarian court to hear any maritime claims for which a ship arrest order has been issued. In case there is an arbitration clause between the parties, the court is bound to it and the case can be heard in the agreed arbitration jurisdiction.

As a qualified transport lawyers and members of Sofia Bar, we do provide representation before Bulgarian courts, including application for ship arrest and legal defense against ship arrests. Contact us to get a quote for your case.

The biggest mistake when dissolving Bulgarian company

dissolve-bulgarian-companyThere are two main reasons why foreigners dissolve their Bulgarian limited companies: [list2]
  • They failed to re-register by end of 2012 OR
  • They want their property on their personal names

[/list2] Regarding the first point, we have alarmed in the past few years that all companies in Bulgaria which haven't been re-registered or dissolved voluntarily, will be subject to compulsory liquidation by the government. According to §5а paragraph 1 of Companies Register Act, the deadline for voluntary dissolving of the non-reregistered companies is set to 31 January 2015, which is just 6 months away. Regarding the second point, people realised the benefit of having the real estate property on their own name and decided to dissolve their holding company. In order to do this, they hired a solicitor or an accountant to conduct the liquidation procedure.

Liquidation has started but is it being done professionally?

Many Brits and Irish who own their properties through limited companies have already started their liquidations, so that they keep their properties. Even if they have not been forced to dissolve their companies, it is still better to do it because of various reasons such as lower annual expenses, better inheritance procedures and security, tax efficiency etc. In this short article I will bring your attention to just one of possible pitfall which you might face if you hire 'just any' accountant or solicitor in Bulgaria to dissolve your company. The trouble is that not many accountants and solicitors specialise in company dissolution and, let me tell you, it's not a straight forward procedure as one might think.

Taxes, taxes..

The purpose of the liquidation, because of which one will bother dissolving his company, will be transfer of the existing real estate property to shareholder's name. However, the normal goal of the company dissolution is to cash any existing assets of the company, to pay all creditors and to return whatever has been left to the company shareholders. As you can see, the liquidator needs to undertake some legal actions of dispossession. They of course lead to creating some tax obligations, both for the company being dissolved and to the shareholders who accept the ownership of the property or the cash, left after selling it to a third party. The liquidator is obliged to notify the Bulgarian National Revenue Agency and National Social Security Institute (in case the company traded and had employed people) which brings the attention of those two authorities to the company dissolution procedures and the possible taxes/fines it owes to the government or to the local town council. The way the liquidator manages and plans the property transfer process is crucial to the tax obligation which would follow after the company is dissolved.

How about HMRC/Irish Revenue and Customs?

Even if you think HMRC doesn't talk to NRA, you might be wrong. There are many cases of cooperation between those two authorities and not only in the VAT filed. When it gets to collecting tax, HMRC knows how to chase people and check their overseas assets. Therefore it is essential to have the liquidator on your side and plan your money/property transactions carefully so that no additional tax will be paid. After all it's your property, why you should pay income tax on it? We at MH Legal understand the importance of international tax planning that's why we provide professional company liquidation services to our British and Irish clients.

Does empty moving truck needs EU operators licence?

emty-trailer-licenceSometimes you need to move a tractor unit from one place to another and can't find a load to cover your diesel costs. Recently we had a case where, the owner of a truck had to move it with an empty trailer to another country. The truck has been bought from Germany with the purpose to be used under Bulgarian operators licence. A very reasonable question was asked - does he need European operators licence if the truck is pulling empty trailer?

European Operators licence for transport good for hire and reward

The EU operators licence (community authorisations) is regulated by Regulation (EC) № 1071/2009. To find out the answer of the above question, we need to look at the definitions set in the Regulation. Article 1, paragraph 2, stipulates what is governed by this regulation:

[blockquote]

  1. This Regulation shall apply to all undertakings established in the Community which are engaged in the occupation of road transport operator. It shall also apply to undertakings which intend to engage in the occupation of road transport operator. References to undertakings engaged in the occupation of road transport operator shall, as appropriate, be considered to include a reference to undertakings intending to engage in such occupation.

[/blockquote]

The above means the the rules apply to all road transport operators. If we check Article 2, point 3 we can find that  "the occupation of road transport operator" means the occupation of road passenger transport operator or the occupation of road haulage operator; We can see that the point of interest here is what exactly is 'road haulage operator'. If we look at point 1 of the same Article 2, we can find that  "the occupation of road haulage operator" means the activity of any undertaking transporting goods for hire or reward by means either of motor vehicles or combinations of vehicles;

You can see that the interpretation of the aforesaid articles leads us to the finding: the Regulation rules apply only if you are road haulage operator, meaning that you need to actually transport goods for hire and reward (you are not allowed to drive on own account 12t+ HGVs)

Bulgarian case law on pulling empty trailer

We have tried to identify some case law on the matter and see if our interpretations of the Regulation are correct. Luckily there is case law about the very same question, we look answer for. In administrative penal case № 253 /2012 of the Bulgarian Lovetch District Court [text in Bulgarian], the jude heard a case where a haulier had been stopped on the road, driving an HGV with empty trailer. He didn't have a valid tachograph test protocol too. Regulatory body had imposed sanctions on the company haulier because of the non-working tachograph and because the haulier didn't have EU operators licence.

The court confirmed the fine for the lack of valid tachograph test but has stricken out the fines imposed on the grounds of lack of operators licence. The motives of the judge are as follows:

[blockquote]

Undoubtfully, the witness testimony showed that the vehicle was empty i.e it was not loaded. Detailed interpretation of the term "transportation" however shows that there has to be moving of goods for hire and reward with own or rented vehicles, including leased vehicles, which is not applicable in the current case. As written in the claim application, the claimant X was not doing carriage of goods but he merey was driving the vehicle empty to town of Pleven to leave the vehicle for sale at an auto trader.

[/blockquote]

You can see from the above, that you don't need a valid operators licence if you merely move your truck/empty trailer to another place. There will be, no doubt, traffic control officers who will argue this. In any case of any sanctions imposed, they can be successfully challenged in court.

EU cross-border truck rental

Truck Rental operators licenceIn their attempt to lower and optimise costs, road transport companies in Europe are trying to apply a cross border truck rental schemes to their international business. One of the most common mistakes is renting trucks, registered in one EU member state to a haulage operator (holder of community authorisation), registered in another member state. Let's look at this example:

A Dutch family road transport company has 10 tractor units, registered in the Netherlands. They face the problem with the extremely low profit margins for general haulage and are seeking a way to optimise costs so they stay in business. Since the EU provides 'access to the market' strategy to all businesses, the Dutch family owned company decide to register a subsidiary road transport company to another cheaper EU country (e.g. Bulgaria) and operate under the Bulgarian Operators licence. One of the first questions every haulage company asks itself is

Can I rent my lorries to a haulage operator, registered in another EU country?

The short answer is No. The long answer can be found in Article 2, point 1 letter 'a' in the EU Directive 2006/1/EC:

[blockquote]

  1. Each Member State shall allow the use within its territory, for the purposes of traffic between Member States, of vehicles hired by undertakings established on the territory of another Member State provided that:

(a) the vehicle is registered or put into circulation in compliance with the laws in the latter Member State;

[/blockquote]

The above text, said in plain English means that holder of EU operators licence can operate with trucks, registered only in his own country. Lorries, registered in one country can not be rented to operator, registered in another country. This is also effective to subsidiary companies or companies, connected in another legal way.

Some companies are renting trucks, but how?

If you do such kind of renting in your current business model, you should stop doing it immediately! This could cause your licence to be revoked and also lead to loss of repute to your company, your transport manager and company owner(s)/director(s). If you see some companies are doing this, it is most probably because they never consulted a transport solicitor, who specialises in international transport law.

The process of operating through a company, having O licence from another EU country can be long, expensive and legally questionable if it is a DIY venture. Luckily MH Legal and it's subsidiary MH Think in UK can provide professional flagging out service and on-going transport management, including professional transport accounting services. We make sure you stay legal throughout Europe and lower your costs to the lowest levels in EU.

Inheriting company in Bulgaria made easy

Supreme Court releives companies when selling propertyFollowing the 2003-2008 property rush, many Brits and Irish have bought properties in Bulgaria through limited companies. Some investors were in their retirement age, hoping to get their last years spent in new Bulgarian home. Due to complicated parent-children relations, in case of death of the company owner (or shareholder), the lawful heirs often couldn't find the property or even company details. Sometimes, a further problem is the complicated shares structure of the company. I have written a small article about how to deal with inherited Bulgarian limited companies published by the British Embassy in Bulgaria in their legal FAQ document.

Groundbreaking Case Law

On 15th November, however, a breakthrough Supreme Court statutory interpretation decision was issued, removing some of the controversial court practices and providing legal guide to all notaries and judges in Bulgaria. The decision consists of two subparts:

  1. Does a limited liability company need explicit decision by its General Meeting so that it can dispose real estate or associated limited property right, owned by the company.
  2. Do provisions of art. 38, para. 1 COA apply in commercial transactions, signed by a person, who is representative of the two or more contracting companies.

The decision's part which is of bigger interest for this article is the first question above. As from this moment on, the notaries in Bulgaria should no longer require General Meeting decision when a company sells/buys real estate property in Bulgaria. If your notary requires so, he's probably not aware of the said Supreme Court statutory interpretation decision.

Impact on inherited limited companies

Let's take as an example a quite common case which appears recently. The parents (partners) have bought a property though a limited company. They have subscribed for company shares in 50/50 ratio. Nobody told the company owners that they should re-register the company by end of 2011, so now the company is subject to compulsory liquidation. The case complicates further when one of the shareholders have passed away. The only way now to save the property is to legally liquidate the company and obtain the ownership though the liquidation process. We are even dealing with much more complicated case now, where one of the company owners is deceased and his partner (both in personal life and business) couldn't be found anywhere.

If we were to follow the old controversial notary/court practice, we would struggle since there's no one to decide on company General Meeting (deceased or missing shareholders), that the property will be transferred to the lawful heirs. We needed to go though complicated legal hoops so that we find a way to solve the legal matter.

Now with this new interpretation decision, it's simply a matter of the liquidator signing the deed and the property will be transferred to the lawful heir. Of course I'm referring to the much complicated cases above. In most common case - sale or purchase of property through a company - the company director's signature will be enough.

Bulgaria breaches the Apostille Convention

UK apostille not recognised in BulgariaThis post is consequence of my week struggle with the Bulgarian Commercial Register's reckless breach of the Apostille Convention. Bulgaria has signed the Hague Convention Abolishing the Requirement for Legalisation for Foreign Public Documents (its official full name) and it is effective for Bulgaria since its adoption by the Bulgarian Pаrliament and promulgation in the state Gazette on 30.04.2001.

Purpose of apostille

Apostille's purpose is to remove the bureaucracy when official document, issued in one signatory state is used in another signatory state. The state that issues the document, puts an apostille on the document, and this document shall be recognised without any further certification on the other state. This basic principle of simplifying paperwork should be followed by all countries that have signed the Aspostille Convention.

One of our clients wanted to register a limited company in Bulgaria and start business as quickly as possible. He was unable to go to the Bulgarian embassy in London to certify the documents, because he was based in Scotland. Therefore I suggested that he takes advantage of the legalisation procedures(apostille), provided in UK by the Foreign and Commonwealth Office.

We have used in Bulgaria apostille, issued in UK on many occasions, including in the Commercial Register and there was no problem before. However we notice some illegal practices in the Registry Agency for not recognising the apostille as is, and requiring additional certifications contrary to the Article 2 of the Convention:

[blockquote]

Each Contracting State shall exempt from legalisation documents to which the present Convention applies and which have to be produced in its territory. For the purposes of the present Convention, legalisation means only the formality by which the diplomatic or consular agents of the country in which the document has to be produced certify the authenticity of the signature, the capacity in which the person signing the document has acted and, where appropriate, the identity of the seal or stamp which it bears.

[/blockquote]

Illegal extra certifications of the apostilled document

However, the registration clerks in the Commercial Register simply don't recognise the apostille, even it is translated in Bulgarian by certified translators. Commercial Register requires additional certification by the Ministry of Foreign affairs, which of course adds extra expenses and an extra 5 days. The argument of the illegal rejection lies in a secondary legislation, namely Art.2a para 2 of the Rules for legalization, certification and translation of documents and other papers (text in Bulgarian):

[blockquote]

(2) The Ministry of Foreign Affairs, respectively "Consular department" may assign with a contract that translations are carried out by state, public, cooperative and private companies.

[/blockquote]

This is the legal text that the Commercial Register requires the illegal additional certification. One of the most shocking facts is that this Regulation is obsolete as it was last amended in 1990 i.e. 11 years before Bulgaria actually adopted the Apostille Convention.

It is obvious even to non-lawyers that the 'no argument' is totally irrelevant, so the only reasonable explanation for denying to accept the apostille as is might be illegal instructions by Agency's HQ to collect fees by illegally requiring further apostille certifications. We have put our arguments many times (10+), but the registration clerks can't follow even the relevant court practice. We have won many similar apostille rejection in court. Every such rejection to comply with the Apostille convention is overruled by the court after appeal. Nevertheless the Agency continues to illegally request additional apostille certifications.

Fighting the illegal extra certification of UK apostille

I have personally asked HMA Jonathan Allen, the British ambassador in Bulgaria, and his answer was pretty clear:

Jonathan Allen replies about apostilled documents used in Bulgaria

Following this confirmation that Bulgaria's careless non-compliance with the convention is well known to the UK ambassador, I also wrote to the Bulgarian Ombudsman, Mr. Penchev,  who is also a former chairman of the Supreme Administrative Court and a reputable judge, so hopefully my complaint is to be taken quite seriously. Current apostille problem affects many foreign businesses which invest in Bulgaria and this illegal practice is just a shame.

Certification of documents in the Bulgarian Embassy in London

certification in Bulgarian embassyThis blog post was provoked by my visit in the Bulgarian embassy in London today. An English fellow was standing in the queue in front of me waiting to certify some documents, clearly given to him by a Bulgarian solicitors firm (there was a letterhead document in his hands). These documents were prepared for registration of a new Bulgarian limited company.

I was quite surprised when he asked the Bulgarian Consul to certify all documents he had. In fact for registration of a new sole owned limited liability company he needed only two documents to be certified, not the whole pack of 9-11 documents.

The entrepreneur started his Bulgarian venture with £140 of paid consular fees, while he could ended up  paying £26 for certifying only the two needed documents. All other documents such as company minutes, articles of association, management agreement etc. need only a simple signature and no certification so why he was ill-advised by his UK based Bulgarian solicitors to certify the full pack is quite strange to me.

If you will be buying property on your name or on the name of an already registered Bulgarian limited company, the costs to certify the power of attorney and the needed couple of declarations will be slightly higher. The reason is that when giving powers about a property to a proxy, the required certification is not only the one of your signature, but also of the content of your statement in the documents. That makes it a double certification and a double consular fee accordingly. This principle is applicable even if you certify a document before a notary public in Bulgaria.

Normally if you are not in Bulgaria and want prepare/sign a document which is intended to be used in Bulgaria, you can do it in either of the following ways:

[list2]

[/list2]

If you are taking the second option, you must be aware that it might be more expensive and time consuming than the first one. Solicitors' rates may vary, but the apostille fee is fixed to £30 + postage costs. However if you are too far away from London, this might be your way to certify the documents.