A Bill amending and supplementing the Bulgarian Code of Civil Procedure (the “CCP”) has been submitted to the National Assembly, proposing substantial changes to the payment order procedure under Article 417 CCP. The Bill’s principal objective is to eliminate the existing differences in the examination of the various categories of applications for payment orders and to facilitate the more effective operation of electronic justice.

The payment order procedure enables a creditor to establish its claim under an expedited procedure and, subject to certain conditions, commence enforcement against the debtor even before the main proceedings have been conducted. Where the claim is based on any of the documents exhaustively listed in Article 417 CCP, the court may directly issue an order for immediate enforcement and a writ of execution.

As a rule, this allows the creditor to take immediate enforcement action regardless of any objection lodged by the debtor. Such an objection requires the creditor to establish its claim through contentious proceedings. In other words, an objection lodged by the debtor does not suspend enforcement.

An exception currently applies to orders issued on the basis of promissory notes, bills of exchange and equivalent negotiable instruments, in which case the debtor’s objection suspends enforcement.

The existing framework provides for a general electronic model for the filing and centralised allocation of applications for orders for payment. As a general rule, an application may be filed with any district court in Bulgaria. A special regime nevertheless applies to applications based on certain documents under Article 417 CCP, including notarial deeds and other instruments bearing notarised signatures, mortgage deeds, pledge agreements, promissory notes, bills of exchange and equivalent negotiable instruments. Such applications must be filed with the district court having jurisdiction as pert the applicant’s current address or registered office and also require the submission of the original document from which the claim arises.

According to the explanatory memorandum to the Bill, this differentiated regime creates difficulties for both the courts and applicants, imposes an additional administrative burden and hinders the complete digitalisation of the order for payment procedure.

To address these issues, the Bill proposes abolishing the special rules on territorial jurisdiction applicable to applications based on the documents referred to above. Consequently, all applications for orders for payment will be filed and allocated under the uniform centralised procedure, regardless of the document on which the claim is based. Creditors will therefore always be able to file an application for an order for immediate enforcement with a district court of their choice.

The requirement for creditors to submit the original document from which the claim arises is also expected to be abolished. For electronic filings, it will be sufficient to attach an electronic image of the document to the application, while applications filed in hard copy will need to be accompanied by a copy certified by the applicant.

The Bill proceeds from the understanding that the submission of the paper original is no longer necessary in the case of notarial deeds, agreements bearing notarised signatures and other documents whose authenticity can be verified by the court electronically through existing registers. This will give electronic filing greater practical significance and eliminate one of the main obstacles to the complete digitalisation of the procedure.

The Bill also proposes substantial changes to the documents capable of serving as grounds for immediate enforcement. Under the proposed amendments, promissory notes, bills of exchange, equivalent negotiable instruments payable to order, as well as bonds and their coupons, will cease to constitute standalone grounds for issuing an order for immediate enforcement under Article 417 CCP.

The explanatory memorandum states that these instruments are increasingly used not as genuine commercial instruments, but as a means of securing claims and exerting pressure on debtors, including consumers and other economically weaker parties. It is therefore considered that removing the procedural privilege afforded to these documents under Article 417 CCP will ensure more balanced protection of the parties.

We consider this approach correct in principle. The negotiable instruments in question contain unilateral statements made in ordinary written form, creating a higher risk of forgery and abuse. Moreover, their abstract nature allows an order for immediate enforcement to be issued without examining, within the payment order procedure, the underlying legal relationship in connection with which the promissory note or bill of exchange was issued.

The current framework nevertheless already provides a certain degree of protection for debtors, since the timely filing of an objection against an order issued on the basis of a promissory note or bill of exchange suspends enforcement. In practice, however, significant risks remain, such as failure to observe the time limit for lodging an objection or substantial advancement of the enforcement proceedings before the objection is filed and processed by the court.

In line with the changes discussed above, an amendment is also proposed to the requirements applicable to agreements for the pledge of movable property under Article 160 of the Bulgarian Obligations and Contracts Act. In future, such an agreement will be capable of serving as grounds for immediate enforcement only if the parties’ signatures have been notarised. The objective is to harmonise the safeguards concerning the authenticity of agreements capable of serving as grounds for immediate enforcement, particularly in view of the proposal to abolish the requirement to submit their originals.

The proposed amendments do not affect the substantive validity of promissory notes, bills of exchange or other negotiable instruments, nor do they affect the creditor’s right to pursue its claim before the courts. They merely amend the conditions for using the privileged procedure under Article 417 CCP. Where the relevant statutory grounds are absent, creditors will, of course, remain entitled to pursue their claims through ordinary contentious proceedings.

From a practical perspective, the Bill will affect both the judiciary and businesses. Banks, financial institutions, debt collection companies and other creditors that traditionally use the procedure under Article 417 CCP as an effective and expedited means of collecting payments will need to align their practices with the new requirements. The changes will also be relevant to notaries, given the envisaged possibility for courts to verify notarial certifications electronically and ex officio.

At the same time, the proposals are intended to reduce the administrative burden, accelerate electronic justice and limit the need for the physical transfer, storage, archiving and return of original documents. The uniform centralised mechanism is also expected to contribute to a more balanced allocation of order for payment cases among district courts.

The Bill is yet to be considered by the National Assembly, and individual provisions may be amended during the legislative process. Nevertheless, the proposals indicate a clear direction towards modernising the order for payment procedure, further integrating electronic justice and achieving a more balanced relationship between creditors’ interests and debtor protection.

This article has been prepared for and is part of the Legal Digest issued by Penkov, Markov & Partners. The publications therein do not constitute legal advice and are not binding. Penkov, Markov & Partners reserves all rights to this material, and any distribution thereof is subject to the prior written consent of the law firm.