Absolute limitation period in Bulgaria: Art. 112 ЗЗД analysis

Art. 112 of the Obligations and Contracts Act (Закон за задълженията и договорите, ЗЗД), introduced by State Gazette (Държавен вестник, ДВ) No. 102 of 1 December 2020 and in force from 2 June 2021, is one of the most significant civil-law changes in recent decades. The purpose of the absolute limitation period is to eliminate the “eternal debtor” phenomenon, where a series of interruptions made it impossible for the general limitation period to ever expire.

Five years after the provision came into force, the first cases of an expired absolute limitation period are due to become reality on 3 June 2031. This analysis covers the legal framework, the eight exceptions, the transitional rules after Constitutional Court (КС) Decision No. 4/2021, and the practical steps for relying on the period.

Legal framework: Art. 112(1) ЗЗД

The Act Supplementing the ЗЗД (ДВ No. 102 of 1 December 2020) created a new Art. 112, which introduces a ten-year absolute limitation period for money claims against natural persons. The vacatio legis under § 3 of the Transitional and Final Provisions (ПЗР) is six months, so the provision came into force on 2 June 2021.

The ratio legis of the provision is clear: before Art. 112 ЗЗД was introduced, creditors could keep their claims “alive” more or less indefinitely by periodically interrupting the limitation period under Art. 116 ЗЗД (acknowledgement of the debt, bringing an action, opening enforcement proceedings). The absolute limitation period puts an end to that possibility.

Scope: who can rely on the absolute limitation period

The absolute limitation period under Art. 112 ЗЗД applies only if two conditions are met together: the debtor is a natural person and the claim is a money claim. It should be stressed that sole traders (еднолични търговци, ЕТ), in respect of obligations arising from their trading activity, are expressly excluded under Art. 112(2), item 1 ЗЗД. The same applies to natural persons who are partners in civil-law partnerships under Art. 357 ЗЗД, in respect of obligations arising from the partnership’s activity.

The eight exceptions in Art. 112(2) ЗЗД

The legislator has provided eight categories of claims to which the absolute limitation period does not apply. These exceptions reflect a balance between protecting the debtor and the public interest in having certain kinds of obligations performed.

A practical problem for lawyers arises in classifying the basis of the claim. For example, if a natural person owes compensation for damage caused by a tort, the creditor can rely on the exception in item 2. But the classification of the basis does not depend on the label put on it by the parties; it depends on the facts established by the court. Where the classification is disputed, reliance on the absolute limitation period may be rejected.

Suspension of the absolute limitation period: Art. 115 and 118 ЗЗД

A key feature of the absolute limitation period is how it interacts with suspension and interruption. Art. 112(3) ЗЗД expressly refers to Art. 115 (suspension) and Art. 118 (waiver of an expired limitation period), but NOT to Art. 116 (interruption). It is precisely the exclusion of Art. 116 that is the essential difference giving the limitation period its “absolute” character.

In practice this means that acts which would normally interrupt the limitation period (acknowledgement by the debtor, bringing an action, opening enforcement proceedings) have no effect on the absolute limitation period. It keeps running. The only mechanism for extending the period is suspension under Art. 115 ЗЗД.

Transitional rules and КС Decision No. 4/2021

Originally, § 2 of the Transitional and Final Provisions (ПЗР) of the Act Supplementing the ЗЗД provided for retroactive effect: for existing cases the limitation period would have run from various earlier moments, from the date the claim became due, from the first enforcement step or from the date the act came into force. That meant that for some debtors the period would have expired in the very first years.

By Decision No. 4 of 20 April 2021 in constitutional case No. 1/2021, the Constitutional Court declared § 2 of the ПЗР unconstitutional. The practical consequence is fundamental: the absolute limitation period under Art. 112 ЗЗД starts to run equally for all obligations from the date the law came into force, 2 June 2021, without exception. The opinion of Prof. Dr Ognyan Gerdzhikov before the КС supported the view that retroactive application is constitutionally impermissible.

The absolute limitation period and tax liabilities

The distinction between the absolute limitation period under Art. 112 ЗЗД and the limitation regime for public claims under Art. 171 of the Tax and Social Security Procedure Code (Данъчно-осигурителен процесуален кодекс, ДОПК) has considerable practical importance. The two regimes are separate and must not be mixed.

The absolute limitation period and writs of execution

The interaction between Art. 112 and Art. 117(2) ЗЗД is one of the most complex practical questions. Under Art. 117(2) ЗЗД, if the claim has been established by a court judgment, the new limitation period is always five years. This raises the question: which period expires first for a claim for which a writ of execution (изпълнителен лист) has already been issued?

The answer depends on the specific case. If on 2 June 2021 there is already a final court judgment and enforcement proceedings have been opened, the limitation period under Art. 115(1), letter “ж” is suspended for the time the proceedings are pending. But if the enforcement proceedings are terminated, the limitation period continues to run. In that scenario the absolute limitation period under Art. 112 can in theory expire before the 5-year period under Art. 117(2), if the debtor has taken no steps that interrupt it.

Constitutionality and the debate

The debate over the constitutionality of Art. 112 ЗЗД has two aspects. The first, on which the КС ruled in Decision No. 4/2021, concerns § 2 of the ПЗР (retroactive application), which was declared unconstitutional by 10 votes “for”. The second aspect, concerning Art. 112 itself, remains contested in legal scholarship.

The arguments “for” the constitutionality of Art. 112 include protecting the debtor as the weaker party and the social function of limitation periods. The arguments “against”, set out by Prof. Gerdzhikov and lawyer Rosen Dimitrov in their commentary, stress the impact on creditors’ rights and the principle of the rule of law. To date the Supreme Court of Cassation (ВКС) has not formed any interpretative case law on Art. 112 itself.

Practical steps for lawyers

The absolute limitation period can be relied on in two main ways: by an objection in pending proceedings, or by a declaratory action under Art. 124 of the Code of Civil Procedure (Граждански процесуален кодекс, ГПК) for the non-existence of the claim.

For additional context on the related topic of personal bankruptcy, see the analysis of the Insolvency of Natural Persons Act (ЗНФЛ). Debtors who cannot rely on the absolute limitation period because of the exceptions in Art. 112(2) may consider insolvency proceedings as an alternative way of being released from their obligations.