Arbitration in Bulgaria: legal analysis and 2025 changes

With the amendments of July 2025 (State Gazette (ДВ) issue 63/2025), the International Commercial Arbitration Act (ЗМТА) was renamed the Arbitration Act (ЗА), a mandatory register of arbitration institutions was introduced, and so was a new chapter on administrative penal liability. These changes make 2025-2026 a turning point for arbitration practice in Bulgaria.

This analysis covers the legal framework of arbitration proceedings, the procedure from the arbitration agreement to enforcement of the award, the grounds for setting aside under Art. 47, a comparison of costs with the state courts, and the practical consequences of the 2025 changes.

What arbitration is: legal definition and types

Arbitration is a voluntary, private way of resolving disputes in which the parties agree that the dispute will be decided by one or more persons (arbitrators) instead of a state court. It rests on the principle of party autonomy in civil procedure: the parties’ freedom to choose the body that will resolve the dispute.

Under § 3 of the Transitional and Final Provisions of the ЗА, arbitration is domestic when both parties have their residence or seat in Bulgaria, and international when at least one of the parties has its seat or residence abroad.

Legal framework: the Arbitration Act (formerly the ЗМТА)

The law was adopted as the International Commercial Arbitration Act (ЗМТА) by State Gazette (ДВ) issue 60/1988. After many amendments (1993, 1998, 2001, 2002, 2017), State Gazette issue 63/2025 renamed the law the Arbitration Act (ЗА) and added two new chapters.

The link with the Civil Procedure Code (ГПК) is set out in Art. 19 ГПК, which allows the parties to a property dispute to agree on resolving it by arbitration, but excludes certain categories of disputes.

Arbitration agreement: form and content

The arbitration agreement is the foundation of arbitration proceedings. Without a valid agreement, the arbitral tribunal has no competence to hear the dispute.

The agreement may take two forms: an arbitration clause within the main contract or a separate arbitration agreement. In both cases, written form is required (Art. 7(2) ЗА).

A key principle is the autonomy of the arbitration clause (Art. 19(2) ЗА): the nullity of the main contract does not automatically mean the nullity of the arbitration agreement.

Which disputes can go to arbitration

Not every dispute can be referred to arbitration. Art. 19 ГПК sets out the scope and the exceptions.

Forming the arbitral tribunal

The composition of the arbitral tribunal is determined by agreement of the parties and, failing that, under the rules of the law.

Arbitration proceedings: the course of the case

Arbitration proceedings begin with the filing of a statement of claim (Art. 23 ЗА). A basic principle is equality of the parties (Art. 22): each party has an equal opportunity to present its arguments and evidence.

As to the applicable substantive law, Art. 38 ЗА provides that the arbitral tribunal decides the dispute according to the law chosen by the parties. If the parties have not made a choice, the arbitral tribunal applies the law it finds most appropriate. With the express consent of the parties, the arbitral tribunal may decide the dispute on the basis of fairness (ex aequo et bono).

The arbitral award and setting aside under Art. 47 ЗА

The arbitral award is final and has the force of a court judgment that has entered into force. The only control mechanism is the action for setting aside before the Supreme Court of Cassation (ВКС), regulated in Art. 47 ЗА. It should be stressed that this is not an appeal on the merits but a review of lawfulness.

Enforcement of arbitral awards

Domestic enforcement of arbitral awards is regulated in Art. 405(3) ГПК. The Sofia City Court (СГС) is competent to issue a writ of execution (изпълнителен лист) on the basis of an arbitral award.

For international recognition and enforcement, the key instrument is the 1958 New York Convention on the recognition and enforcement of foreign arbitral awards, to which Bulgaria is a party. Arts. 51-52 ЗА regulate the recognition and enforcement of foreign arbitral awards, and the grounds for refusal are analogous to those under the New York Convention.

Fees and costs: arbitration versus the state court

One of the main reasons for choosing arbitration is economic efficiency, especially for high-value claims. The arbitration fee in institutional arbitration (e.g. the Court of Arbitration at the БТПП) is degressive, that is, it falls as a percentage as the value of the claim rises. In the state court the fees are proportional.

The 2025 changes: the Register and oversight

The amendments in State Gazette issue 63/2025 (in force from 1 August 2025) introduced two new mechanisms that substantially change the landscape of arbitration practice in Bulgaria.

Practical advice when choosing arbitration

The choice between arbitration and a state court is a strategic decision that should take into account the value of the dispute, the need for confidentiality, the speed wanted and the possibility of international enforcement.

Pravko provides legal information but does not replace advice from a lawyer. For specific questions about arbitration proceedings, consult a lawyer who specialises in commercial or civil procedural law.