USEFUL INFO

STATEMENT OF LAW OFFICE „POPOV AND PARTNERS“

REGARDING: the amendments of the Agricultural Land Ownership and Use Act dated 07.05.2014 (New SG,  No 38/2014) and dated 20.02.2015 (New. SG No 14/2015, in force of 1.05.2015).

With the amendment of the Agricultural Land Ownership and Use Act dated 07.05.2014 (New SG,  No 38/2014)  it is prohibited to companies whose partners are foreign natural or legal persons, to acquire and use a right of ownership over agricultural lands in Bulgaria. From the foreign persons circle are excluded the legal persons from the European Union Member States or from countries – parties under the Agreement on the European Economic Area. The latest could acquire a right of ownership over agricultural lands under an order which is determined by the law.

This amendment of the Agricultural Land Ownership and Use Act is unconstitutional and discriminatory. It contradicts the International Law and the European Union law as well to the fundamental legal principles.

There are no juridical or economic reasons imposing such restrictive legal measures towards certain circle of persons from countries – third countries, with which it is established durable political, economic and cultural relations. This amendment is a result of closely partisan and economic interests.

The arguments of this are the following:

1.The Act is discriminatory. It is into force only with respect to persons which are outside the European Union or from countries – parties under the Agreement on the European Economic Area. Thus one of the fundamental law principals is impaired – this one for the equality. 

2. The Act in fact operates retroactively. Into Decision № 7 dated 10.04.2001 of the Constitutional Court of Republic of Bulgaria is provided that when “retroactive force of an act which impinges on acquired rights is not motivated in favor of overriding public interest without expressed clear will for consequences settlement, it could not be determined otherwise except as expropriation”. An attribution of such operation of the law is in direct confrontation with art. 14 of the Statutory Instruments Act.

3.The act is unconstitutionalThe right of ownership is protected by the Constitution of Republic of Bulgaria – art. 17, ph. 1. In compliance with art. 15 of the Statutory Instruments Act, the laws could not contradict the Constitution as a supreme legal act of Republic of Bulgaria.

4.The Act is in confrontation with the European Union Law.th Such legislation confronts the legal certainty principle which also is a fundamental principle in European Union Law. The implementation of compulsion towards persons, legally acquired a right of ownership, presents a sharp contradiction with the free movement of capital, as European Union essential economic principle. Into Decision № 1 dated 28th of January 2014 of the Constitutional Court of Republic of Bulgaria is provided that: “With the provision of art. 63, § 1 of the Treaty on the Function of the European Union is introduced an explicit prohibition for restrictions imposing over the capital movement between member states as well as between member states and third countries, whereat restriction measures could not be unilaterally introduced with an act of the national legislation.”
It is on face an explicit confrontation with the provision of art. 17, paragraph 1 of the Carter of the Fundamental Rights of the European Union, an attachment towards the Treaty on the Function of the European Union, namely “Everyone has the right to own, use, dispose of and bequeath his or her lawfully acquired possessions. No one may be deprived of his or her possessions, except in the public interest and in the cases and under the conditions provided for by law, subject to fair compensation being paid in good time for their loss. The use of property may be regulated by law in so far as is necessary for the general interest.”
The European Union law has a primacy over the domestic law and the latter could not contradict it.

5.The Act confronts the International Law.  International Contracts between Republic of Bulgaria and third countries have been concluded regarding the mutual promotion and protection of the investments. The Contracts are reified by law, promulgated and entered into force for Republic of Bulgaria. In compliance with art. 5, ph. 4 of the Constitution of Republic of Bulgaria these Contracts takes precedence over the domestic legislation. In compliance with some of these Contracts, the right of ownership shall be treated as an investment. 
The firms, owned by legal persons, registered in countries outside the European Union have legally acquired the land and complying with the Bulgarian legislation. Due to the fact that the statutory restriction extends over the legal status existing before the Act amendment, they are placed in discriminatory position than the other legal persons on the territory of the country. These firms – nevertheless that they have legally invested in land ownership on the territory of Republic of Bulgaria are threatened in first place with severe financial penalties, provided into the adopted at the beginning of the present year and entering into force from 01.05.2015 art. 40a of ALOUA – fines from 100 leva per owned acre agricultural land, which amount shall be tripled at persistent breach and it is intended to be imposed as long as these firms own land on the territory of the country. This fact, in turn, is converted to an unacceptable pressure for these firms to sell the agricultural lands owned by them – on the cheap – to companies, which meet the statutory conditions.