May 4

Awarding Due Obligations Stipulated in Foreign Currency

  With its interpretative decision from 29th Apr 2015 on interpretative case No 4/2014 of the General Assembly of the Civil and Trade Chamber (GACTC) the Supreme Court of Cassation gave a mandatory interpretation of the so far contradictory case-law concerning the right of courts to award the BGN equivalent of obligations stipulated in foreign currency.

  According to one of the hitherto common solutions in case-law when contractual obligations had been stipulated in foreign currency, there was no obstacle for the creditor to file his/her claim and for court to adjudge the BGN equivalent of the obligation initially stipulated in foreign currency.

  According to the opposite case-law solution for similar cases the court may not sentence the debtor to pay in a currency different from the one previously stipulated between the parties.

  With its decision from 29th Apr 2015 the Supreme Court of Cassation adopts the second solution to the issue in question, and namely that in cases of pecuniary obligations initially stipulated in a certain foreign currency, the court may adjudge the due sum in the stipulated currency only, unless otherwise stipulated between the parties (valorization clause).

  With that interpretative decision of its the Supreme Court of Cassation gives ground to a number of reasonable questions – like the one concerning the calculation of the interest on arrears for obligations stipulated in foreign currency. While till now in factually simple cases for obligations in BGN this was done using different electronic applications for calculation of interest on arrears, from now on because of the lack of such electronic applications for calculation of interest on arrears in foreign currency, even in factually simple cases the claimant would find him/her-self forced to bear additional expenses for court experts to do the respective calculations. Also open remains the question about how claims which have been upheld in foreign currency shall be realized within execution proceedings – in foreign currency or in BGN, under what course-rate and for which date.