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Penkov, Markov and partners keeps winning law suits against the Republic of Bulgaria for reimbursement of the 20% fee, withheld from the RES producers in the country and announced after that for unconstitutional

12 January 2021

The litigation team in Penkov, Markov and partners, Attorney at law has won at third court instance further court proceedings from the series of law suits against the Republic of Bulgaria for reimbursement of the 20% fee, withheld from the RES producers and announced after that for unconstitutional.

On 10.11.2020 the Supreme Court of Cassation, Civil chamber, third department, in a closed session, ruled Order № 762/2020, according to which court decision № 1188/20.05.2019, commercial case № 5237/2018 of Sofia Court of Appeal, which has been issued entirely in favour of the RES producer – claimant in the court proceedings, and appealed by the Republic of Bulgaria, was not admitted to cassation control. With similar arguments, described in Order 763/09.12.2020, Civil chamber, fourth department, the Supreme Court of Cassation did not admit to cassation control court decision 3045/14.05.2020, appellate civil case 6277/2019 of Sofia City Court, and also by virtue of Order № 855/09.12.2020 the Supreme Court of Cassation confirmed the ruled court decision 2284/21.04.2020, appellate civil case 3570/2019 of Sofia City Court.

In the above proceedings the State was ordered on the grounds of art. 49 of the Obligations and Contracts Act in connection with art. 7 of the Constitution of Republic of Bulgaria to pay the claimants compensation for damages, equal to the 20% fee, deducted from the latter.

By virtue of the reasoning of the Supreme Court of Cassation in the above said orders the constant court practice, pronounced in April 2020 by the Supreme Court of Cassation was confirmed as constant regarding the following:

The State is liable directly for the damages, arisen from the legislative activity of its organ – the National Assembly, and more specifically: “Both, the adoption of an unconstitutional legal act, as well as the forthcoming unlawful omission to act of the organ, which has adopted the unconstitutional legal act, shall be deemed legal ground for the liability for damages of the State”.

Similarly to the above, through court decision 207/06.01.2021 the Supreme Court of Cassation, Civil chamber, Third department left in force court decision № 4875/02.07.2019, pronounced in civil case № 11362/2018 of Sofia City Court, Civil chamber, as per which the Republic of Bulgaria was ordered to reimburse on the grounds of art. 55, para 1 of the Obligations and Contracts Act the unlawfully deducted fee under art. 35a of the Renewable Energy Act in the period from 01.04.2014 up to 09.08.2014.

In its reasoning in the above decision, the Supreme Court of Cassation acknowledged that “The State which is a defendant in the current case, has committed a delict through its legislative body, which has adopted unconstitutional legal provision and afterwards has not performed its obligation under art. 22, para 4 of the Constitutional Court Act to rectify the unfavorable law consequences occurred as a result of the application of the said legal provision. Therefore, the legal entities, who have paid the fee under art. 35a of the Renewable Energy Act, have the right to request it back from the State as a compensation for caused material damages /court decision No. 71 from 6 April 2019 in civil case No. 3804/2019 of the Supreme Court of Cassation /. There is no obstacle for the said legal subjects to request the reimbursement of the fee paid without legal grounds, because to relations, subject of pending court proceedings, the unconstitutional legal provision shall not apply, as it is described in details in the answer to the question. The court, which shall consider the justice as leading element of the rule of law country, shall not apply the unconstitutional law and what has been given on the grounds thereon shall be reimbursed”.

Thus, the Supreme Court of Cassation has confirmed the case law as regards the liability of the State for damages as a result of unconstitutional legislative activity of the National Assembly, established with court decisions in April 2020, and at the same time has respected the reasoning of the emblematic Interpretation decision No 3/28.04.2020 of the Constitutional Court of Republic of Bulgaria which gives interpretation on the issue when shall an unconstitutional legal provision be applied. The Supreme Court of Cassation acknowledges that the unconstitutional legal provisions shall not apply to pending court proceedings in civil courts in relation to reimbursement of the above fee.

In the light of the above we have greater expectations that all law suits, based on claim for reimbursement/ payment of compensation with regard to the unlawful deducted 20
% fee from the RES producers, will be unambiguously finalized in favor of the concerned private entities.

Links to the acts of the Supreme Court of Cassation might be found hereunder:

ВКС (vks.bg)