PART THREE REFORM IN CIVIL LAW AND PROCEDURE. 1. General

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1 59 PART THREE REFORM IN CIVIL LAW AND PROCEDURE 1. Genera Whie the deveopment of civi egisation does not aways bear directy on corruption, it can provide conditions that are either favorabe or hostie to the forms of corruption. The past thirteen years have seen fundamenta changes in Bugarian civi aw in response to the need for new rues on civi reationships, given the transition from a panned to a market economy and the introduction of European standards in this area. The numerous egisative amendments, however, have not aways been wethought-over and consistent with each other and have entaied contradictory enforcement and, finay, inadequate rues and protection of the rights of the subjects of civi aw. In addition, haf-way, superficia and often unsuccessfu reforms have faied to prevent corruption in the administration of justice in civi cases, whereas the enforcement of aready adopted egisation has not reveaed any tangibe corruption-deterring potentia. This virtuay undermines the very idea of the rue of aw or even the eements of statehood. One of the expanations for that inconsistency and for the faiure of man attempted reforms is that the changes are often drafted by experts acking the required muti-faceted knowedge who are poiticay aied or connected with the interests of various economic groups. In addition, there has been a growing practice for judges to draft the reforms of their own activities, of prosecutors and investigators to do the same about their own work, for attorneys to be required to deveop the rues on their operations, etc. In this situation, some inertia inevitaby comes to surface and the majority of judges prefer the status quo in quite a good faith as they are tired of reforms. On the other hand, the stand of an insider is rarey sufficient to pinpoint the defects of any system. At the same time, if an attempt is made to overcome corrupt phenomena and practices, those benefiting from the status quo woud be the ones to offer the most serious resistance. The indiscriminate reiance on advice by foreign experts, and the automatic copying of ega rues existing esewhere have not proven to be any more successfu. This is aso vaid for the formaistic and mechanica transposition of provisions from the EU directives. The disturbing findings about the situation with civi aw and procedure (incuding the enforcement of judgments and the provision of coatera) generate the need for a swift and radica anti-corruption reform in respect of civi procedure and for a further systematic, coherent and consistent deveopment of substantive civi aw. To outine the parameters of that deveopment and the specific reforms to be proposed, it is compeing to identify the existing probems and to carry out a serious and in-depth anaysis of any factors that impede the probem-free deveopment of a modern civi turnover in the setting of a free market economy and under the rue of aw.

2 60 JUDICIAL ANTI-CORRUPTION PROGRAM 1.1. Probems in substantive civi aw Substantive civi aw is aimed at providing comprehensive reguation of an extremey important sphere of socia reations. Not ony is it appied by judicia bodies, but it is aso binding on a subjects of aw. As ong as the disputes resuting from aeged transgressions of the aws are resoved by the court, the shortcomings and inconsistencies in substantive aw affect adversey the quaity of the administration of justice and, hence, pubic trust in the Judiciary. The probems in substantive civi aw are therefore interwoven with those in civi procedure and these two sets of probems shoud indeed be addressed jointy In the fied of property aw, the main spots of corrupt pressures coud be said to exist in the foowing areas: notaria aw The imperfect rues on the operation of private notaries seriousy undermine the notaria form of authentication and often pave the way to corruption or serve as an incentive to crime in civi reationships or in the course of court proceedings. the system of registration of rea estate transactions The existing system fais to provide for genuine guarantees and certainty in the case of rea estate transactions. Rea estate registers are currenty kept and entries are made in the 100 regiona courts scattered across the country, and in paper form. This generates enormous probems as far as the reiabiity of the information and ega certainty are concerned. For objective reasons, the process of changes (buiding up a nationa eectronic cadastre and deveoping that cadastre into a nation-wide data base) aunched with the enactment of the Law on the Cadastre and on the Rea Estate Registry (in force since January 1, 2001) is engthy and expensive, and woud hardy be finaized soon. At the same time, that process has not been inked yet to the required changes in the system of registries in genera, or in the system of company registration, in particuar In the fied of commercia aw as we, there are statutory preconditions for actions that might, directy or indirecty, entai corruption: company aw Despite the attained high eve of harmonization of Bugarian company aw with EC company aw, no satisfactory degree of certainty has been achieved yet in the commercia and economic turnover, nor has it been put on a transparent and corruption-free basis. Such an objective has been pursued with the ast amendments to the Commercia Law of June 2003 (pubished, SG, issue 58 of 2003) and in particuar the detaied reguation of companies transformation and confict of interest prevention. In addition, whie amendments have been initiated to protect minority sharehoders, the excessive aspiration to uphod their rights sometimes yieds the opposite effect - there have been cases of abuse against majority sharehoders, and this serves as a vehice to impede the

3 61 day-to-day operation of companies. the ega framework of corporate insovency Previous amendments to the rues on corporate insovency have not resuted in any materia acceeration of insovency proceedings. The potentia therefore persists for attempts to obtain appropriate judgments more quicky by resort to corrupt methods. References to the rues on execution aid down in the Code of Civi Procedure aso contributed to compicating and deaying the proceedings. The number of cases instituted in previous years and the number of newy-opened insovency proceedings remain excessive. The ast amendments to the Commercia Law aim at to overcome most of these shortcomings, however it is too eary for the resuts of their impementation to be predicted. the system of company incorporation The status of company incorporation forms part of the probem with the status of registration in genera. The inefficient system of court registration in Bugaria 11 is among the factors that predetermine the high eve of corruption in court. The existing registers in Bugaria are primariy decentraized and the courts keep them in paper form. Some courts have experimented with automated information systems but eectronic records have no ega effect as yet. As the voume of information in the registers is growing, the data become ever ess accessibe and handing those data becomes sower and sower, or even impossibe. This, in turn, contributes to a strong corruption pressure both when certain entries are made in the registers and when information from the registers is to be obtained. Given the non-contentious nature of incorporation procedure that deveop before the company divisions of district courts, the judges are deprived of any genuine opportunity to contro the awfuness of the resoutions that are passed by a ega entity and are subject to registration, e.g. those for changing the members of company governing bodies. Work organization in company divisions is not based on unified standards that might ensure the speediness and reiabiity of the registrations and entries made, so these factors become dependent on non-magistrates (e.g. court cerks). The obsoete, or even antediuvian, manner of keeping the registers and browsing them for information, and the extremey compex procedure of modifying or rectifying the information in them form a powerfu weapon to take over the contro of companies to the detriment of minority sharehoders. Peope invoved in registration proceedings beieve that a number of courts have unwritten rates for every service that is provided. Not ony does that situation inhibit the norma deveopment of business and turnover, it aso fues the resistant pubic perception of corruption in the judicia system In the fied of abor aw: Irrespective of the positive deveopments in the ega framework of empoyment reationships designed to bring those in conformity with modern economic conditions, abor cases are sti the argest share of a 11 This is true both of the registration of ega entities in genera, incuding those with non-for-profit objectives, and for the rea estate register.

4 62 JUDICIAL ANTI-CORRUPTION PROGRAM court cases in Bugaria, whie substantia unempoyment persists. A number of essentia issues are sti on the agenda, namey to provide better guarantees for and protect the right to work as procaimed by the Constitution, and to define the effects of the unawfu settement of abor disputes. Empoyment reationships and abor disputes aso mirror the probems which exist in other sets of connected ega reationships, such as administrative, civi service, socia security, pension, socia assistance and unempoyment benefit reations, etc. which coud transfer eements to corruption to abor cases Contempated reforms in the fied of famiy aw have not taken pace yet, regardess of the ongoing debate. The inadequate rues on adoption nurture myriad corrupt practices, sometimes with internationa invovement As regards consumer protection, consumers whose interests have been harmed are not yet abe to defend their rights coectivey (i.e. no cass actions are possibe). Last but no east, account shoud be taken of the fact that in most cases corrupt practices inked to substantive civi aw are due not to the imperfections of the ega framework per se but to the corrupt attitudes of the entire society, to defective civi procedure, to the fawed administrative aw, to the ack of iabiity for pubic officias and to inefficiency of crimina egisation. OPINION ON THE POSSIBLE INTRODUCTION OF FORFEITURE BY THE STATE (INCLUDING FREEZING AND SEIZURE) OF PROPERTY ACQUIRED TROUGH CRIMINAL ACTIVITY Source: CMS of Coaition 2000 Yes No Does not know/ No response It woud be a too to quicky forfeit and freeze assets derived from crimina activity, thus contributing to a more efficient suppression of corruption A good idea but no sufficient guarantees against possibe abuse It woud not contribute to deterring corruption As regards civi iabiity for crimina offences, incuding corruption-reated crimes, the Draft Law on Forfeiture by the State of Property Acquired through Crimina Activity (prepared by MoI) has kinded vivid discussions. Particuary debatabe are the proposas to introduce a suppementary pecuniary sanction (parae to and independent of any crimina iabiity), as we as summary procedures, referred to as specia procedures for freezing and seizure with a view to forfeiture. Whie the draft aw provides for a machinery for the quick freezing and forfeiture of assets derived from crimina activity (and this coud enhance the combat against crime), it fais to provide any guarantees against the unawfu appication of its measures so as to serve improper economic or poitica interests. The intended benefits of the future aw coud thus produce nega-

5 63 tive effects in that the aw coud support corruption instead of preventing or penaizing it. The pos conducted during the debates on the draft to identify the pubic opinions about the importance and the expected resuts of the draft have reveaed a high eve of approva and support of the measures proposed. This coud be attributed to the awareness of the need to resist growing crime by resort to more stringent and quicker measures. At the same time, despite the arge-scae approva of the draft and its expected positive effect as an efficient deterrent of corruption, many respondents have voiced concerns about possibe abuse Probems in civi procedure Unike substantive civi aw where the separate institutes exist reativey autonomousy and the drawbacks of existing rues that entice into corrupt practices coud be rectified reativey independenty, this is impossibe for civi procedure as, on the whoe, it is of crucia importance to the combat against corruption in a its forms. This is so as, on the one hand, civi procedure is both a genera technique of protecting substantive ega reationships and a key too to resist corrupt phenomena. On the other hand, civi procedure in its nature is a means to protect substantive civi rights and ega reationships in an environment of adversaria itigation and cashing interests of disputants where the resoution of a ega dispute depends on the pronouncement made by the competent authority (which consists in steps undertaken by natura persons forming the persona substratum of the authority in question). Therefore, civi procedure itsef is a foca point where corrupt practices become easiy visibe. The previous endeavors for reforms coud be given a two-fod description: In the first pace, the aw-maker has faied to even attempt to identify and incorporate in the ega framework the modern trends in the aw of civi procedure. Instead, the Legisature undertook, yet in a rather straightforward manner, to reproduce od rues created and used in the past and not quite fit for the contemporary conditions. Moreover, those rues were not particuary famiiar to that generation of Bugarian awyers who were supposed to appy them. The impementation of the reform naturay highighted a number of faws in the rues. The approach widey used to remedy those was rather cosmetic in that the amendments designed to improve the rues not ony faied to hit their target but in a number of occasions evoked other serious probems Secondy, those amendments were not provided with a sound materia and financia basis and most of them turned out to be popuist moves. Therefore, they ony deepened the divide between the pubic and the Judiciary. The numerous incompetent attempts to improve the rues of civi procedure have resuted in a situation which often amounts, for a practica purposes, to a denia of justice.

6 64 JUDICIAL ANTI-CORRUPTION PROGRAM Besides, some other key factors have aso contributed to the faiures in civi procedure, such as: The inefficient or totay acking crimina repression. This is the core reason for a sorts of abuse when adversaria proceedings, coatera proceedings or enforcement are in progress. The ack of working mechanisms for attaching discipinary, administrative or civi iabiity to unawfu or improper behavior. The rues on iabiity (in a its forms) give the impression that everything is aowed - or at east goes unpunished. A sustainabe pubic disrespect for justice is thus perceived. This is a negative factor of a particuar weight in itsef. Those moods have recenty been reinforced by the overa discontent with the work of the courts and by the day-to-day encounters of ordinary citizens with the impunity of individuas whose unawfu behavior (in the widest sense of this term) deserves the strictest possibe sanctions but who tread the pubic domain as successfu peope, in contrast to those who have faied because they have been aw-abiding and respectfu of the ega order. A those factors generate ega nihiism and a tota disrespect for aw which coud finay prevent the functioning of the state on the basis of the rue of aw. Some other specific probems of civi procedure deserve a specia mention as we: The introduction of three-instance procedure has resuted mosty in a avish civi procedure where the functions of the first and the second instance argey overap; procedura discipine is poor as evidence can be submitted even when the case is reheard by the instance of cassation. There are no good reasons why a cases shoud be handed by a the three instances. It is especiay unacceptabe for the facts of a case to be estabished by two instances in a row which, moreover, have simiar powers in that respect. Irreguar summoning and the infinite dodges the parties are used to empoy represent key factors for the engthy proceedings in any individua case. A previous changes have modesty attempted to pace the burden of obtaining information about the procedura deveopments on the party itsef. Nonetheess, there are sti opportunities now (after severa amendments aong these ines since 1997) to deay the proceedings by interrupting the order of summoning, and aso because of the need to serve notice that the written judgment is ready (after the end of the procedure before first and second instance). Substantia amendments to enforcement procedure: an area which is susceptibe to corruption has remained amost unreformed over the past 13 years. The atest amendments to the Code of Civi Procedure (in force as from 11 November 2002) were geared towards improving and acceerating the proceedings. At the same time, one coud be skeptica about the expected suppression of corruption as there are sti statutory possibiities to procrastinate cases, inter aia by use of corrupt means.

7 SPREAD OF CORRUPTION IN DIFFERENT SEGMENTS OF CIVIL PROCEEDINGS 65 The existing framework of enforcement and coatera procedures reveas % another shortcoming which is essentia in terms of deterring corruption. In most cases coatera and enforcement (which argey predetermine the economic contents and the efficiency of the ega protection) are decided on by a district (usu. second-instance) court and the disputed facts can never be invoked again before the Supreme Court of Cassation. This entais a sorts of inventions, et aone the fact that corrupt practices deveop much easier at oca eve (for exampe, there coud be an award by a reputabe internationa arbitration court in favor of a party and the three-instance proceedings for recognition and enforcement of the award in Bugaria coud have been finaized successfuy; ater, the same party might fai to obtain coatera or to enforce the award and such cases coud ony be reviewed by district courts). Adversaria itigation 20.0 Coatera proceedings 5.9 Enforcement proceedings 14.8 Non-contentious itigation (incuding registration proceedings) 13.9 Other (pease specify) 0.9 Equay spread in a segments 12.1 No corruption exists in civi proceedings 5.3 Does not know/no response 27.1 Source: CMS of Coaition 2000 According to the resuts of the survey, one out of four magistrates is of the view that corruption is most widespread in adversaria itigation. It is noteworthy that this opinion is mainy shared by pubic prosecutors and investigators, whereas judges mosty beieve corruption exists in non-contentious itigation (incuding registration proceedings) and enforcement. 2. The objective of reforms in civi aw and procedure The reforms are intended to propose measures whereby a factors whose manifestation hinder, in one way or another, the modern and efficient administration of justice in civi cases shoud come under attack. The resut shoud be court orders and judgments of high quaity, awfu and fair. In the ong run, reforms in civi aw and procedure shoud bring about a serious change in the current paradigm of a socia reations which can be depicted as a superficia and formaistic perception of aw and faiure to respect the government institutions, couped with high eves of crime and corruption even among those vested with the exercise of pubic functions, and a this to the detriment of the hepess ordinary citizen. Apparenty, there is a compeing need for a comprehensive and in-depth reconsideration of the overa design of the rues on civi aw and procedure in a their aspects. Aong these ines, it is very important, though insufficient, to draft a good mode of a civi procedure aw.

8 66 3. Proposed reforms 3.1. Amendments to commercia aw JUDICIAL ANTI-CORRUPTION PROGRAM The haf-way soutions and the inefficient amendments made so far have imposed the need for a fundamenta and substantia reworking of insovency procedure, as these are now endessy inefficient and formaistic, and form a major source of corruption. The Amendments to the Commercia Code passed in June of this year contain some provisions to acceerate insovency proceedings and to improve corporate governance (better ega guarantees for the participation of sharehoders in the Genera Meeting, improved corporate management and supervision rues, and avoidance of confict of interests). These shoud reduce the chances for corruption and enhance transparency. Changes in this sphere are a must for the deveopment of commercia and economic operations in the country on a non-corrupt basis. Those changes, however, shoud be carefuy thought over and discussed with a stakehoders. That woud hep estabish a statutory framework matching the everyday needs and avoid the turbuence of frequent amendments that generate instabiity and uncertainty Registration reform To meet the needs of modern turnover, the registration system shoud be centraized, kept in an eectronic form and enabe the making of entries and the provision of information by way of eectronic rea-time teecommunication. The persons concerned coud thus notify any third party of newy-occurred circumstances and facts within the matter of hours, by way of eectronic registration. Third parties, in turn, woud be abe to check the status at the register virtuay at the time when transactions occur. The possibiities for any iega moves in reation to registration and to the receipt of information woud thus be reduced to a minimum. A good possibiity to modernize the registration system and to reduce its corruption potentia woud be to repace the current manua registration in court with registration at a Centra Register of Lega Entities. This shoud be a pubic institution (a state agency) attached to a centra authority (the Ministry of Justice or the Ministry of Economy, etc.). The existence of such a Centra Register woud form the basis for buiding up an Eectronic Registries Center. The Centra Register of Lega Entities coud compie the registration data for a ega persons governed by private aw and for a state-owned enterprises (poitica parties and trade unions wi be excuded). The ega entities register coud be merged with the Centra Pedges Register. Such a singe register woud contain a the information on the persons and on any coatera provided by them, thus avoiding the useess dupication of information in the commercia register, and in the pedges register and the ensuing risks of mistakes and inconsistencies. In the onger run, we coud think of merging the ega entities register and the rea estate register so as to produce an Eectronic Registries Center. Of course, this coud ony be done after the nationa eectronic cadastre has been finaized and incorporated in the singe nationa data-base. In parae, the registration reform shoud graduay boost the merger of or inking to other existing or newy-set registers (tax registers, motor vehice registers, etc.).

9 67 PROPOSAL FOR THE STRUCTURE OF THE ELECTRONIC REGISTRIES CENTER Eectronic Registries Center Tax Registers Register of Motor Vehices The move to a Centra Register of Lega Entities and to an Eectronic Registries Center, couped with the projected incusion of the rea estate register in that system, woud act as a strong deterrent to corruption and woud narrow down substantiay the possibiities for any unawfu practices in the operation of the registers. Centra Register of Lega Entities Uniform System for Registration of Citizens Centra Property Register Centra Pedges Register Other Connected Registers 3.3. Amendments to abor aw The objective is to introduce an adequate statutory framework to counter the discriminatory practices of empoyers, as these essentiay come down to a vioation of the right to work as procaimed by the Constitution. a nationa program (strategy) shoud be drafted for the aboition and prevention of discrimination with respect to empoyment and the professions; a ega definition shoud be provided of direct discrimination which shoud cover inter aia harassment at work (incuding sexua harassment); work of comparabe vaue shoud be provided for and reguated; a ist of suppementary payments shoud be drawn up in order to uphod the equa pay principe (s. 243 of the Labor Code); the empoyer (defendant) shoud assume the burden of proof in cases where aegations are made of discriminatory practices at the workpace;

10 68 JUDICIAL ANTI-CORRUPTION PROGRAM the idea is discussed to set up abor courts to meet the need for speciaized, quick and competent administration of justice in abor disputes. In the fied of abor aw, attention shoud be given to the practices of indirect (hidden) discrimination in the exercise of empoyment rights and obigations. The making or termination of contracts of empoyment partiay depends on persona and poitica reationships and connections. Sometimes privieges or restrictions can be found which are based on nationaity, origin, sex, race, coor, age, poitica or reigious beief, memberships of particuar trade unions or other pubic organizations or movements, famiy, socia or property status, or disabiity. These issues have not been debated yet but bear directy on the deveopment of corrupt processes and on the possibiity to prevent such processes right at the outset or as substantive ega reationships deveop. They aso affect the way in which cases are heard and resoved. Last but not east, this topic is particuary important and reevant in the context of aigning Bugarian egisation with EC aw, and needs to be specificay addressed Proposed reforms in civi procedure The number of instances and other genera issues of civi procedure The entire paradigm of the existing three instances civi procedure shoud be revisited: It is recommended to introduce reguar two-instance procedure, with a possibiity for an extraordinary review by the Supreme Court of Cassation of a aspects of the substantive and procedura rues invoved in a case, whie carefuy deveoping the criteria for aowing such reviews. The procedure under s. 231 et seq. of the Code of Civi Procedure shoud be kept. It is unacceptabe to preserve the proceedings before the second instance in their current form. The view that prevais in practice is that the appeate instance is another first instance. Regretfuy enough, that view is no more than a primitive textbook ciche (and regretfuy, again, it is that view that underies Interpretative Decision No. 1/99 of the Supreme Court of Cassation). Modern requirements woud be matched far better if the appeate court just had the power to review the judgment and reverse it (this was in fact the second-instance procedure before the start of the reform). In addition, the admission of new evidence shoud ony be confined to newy-occurred circumstances or to the discosure of existing facts or evidence that coud not have been known to (or estabished by) the parties despite their best care and good faith. The remittance of cases to the ower instance shoud ony be reserved for judgments that are void and inadmissibe (provided that it is sti the court that has to pronounce) and to the most fagrant procedura vioations. The judgments shoud become fina after the pronouncement of the second instance. Ruings (i.e. court acts other than fina judgments on the merits) which are expicity subject to appea by virtue of the aw shoud be reviewed by the Supreme Court of Cassation.

11 69 It is of the essence to define the powers of the separate instances and to avoid the unnecessary redundancy in their work 12. The powers of the Supreme Court of Cassation shoud be reguated in such a way that the supreme instance coud no onger be used as a reguar instance in amost a cases. At the same time, a genuine possibiity shoud be preserved for the Supreme Court of Cassation to perform its constitutiona function to ensure the accurate and uniform appication of the aws by a courts. It coud aso be provided that the Supreme Court of Cassation sha pronounce in cases where substantia financia interests are invoved. Irrespective of the technica form to be used for that purpose (the Supreme Court of Cassation coud either stop acting as a reguar instance and extraordinary review coud be introduced simiar to that existing before, or coud aternativey keep its nature of a third reguar instance with a possibiity to pronounce seectivey (ike the Supreme Court of the United States), thus the work of the Supreme Court of Cassation woud argey be reieved and its quaity is expected to improve as a resut of that. Indeed, the workoad of that institution is currenty unbearabe. On the other hand, the possibiities to remit the case back for rehearing by the ower instance (whichever it is) shoud be very imited. An aternative woud be to keep the reguar three-instance proceedings but sharpy reduce the number of cases on which the Supreme Court of Cassation woud pronounce (it shoud ensure the accurate and uniform appication of the aws by a courts when it comes to fundamenta issues of aw-enforcement, and then (optionay) pronounce on cases where very arge pubic or financia interests are at stake). If the three-instance reguar procedure is kept (regardess of whether the Supreme Court of Cassation woud be empowered to pronounce seectivey), parties shoud be aowed to skip instances where the issue at stake ony concerns the correct appication of substantive rues. The number of instances invoved in the recognition and enforcement of foreign judgments and arbitra awards aso needs to be reconsidered (two instances are recommended, the first of them being Sofia Court of Appea (or the appeate courts) and the second being the Supreme Court of Cassation. The participation of counse in civi proceedings shoud be radicay revised. At present, attorneys bear no responsibiity for any abusive exercise of procedura rights stemming from the aw. Responsibiity must be provided for, incuding suspension or disbarment for ceary unreasonabe procedura steps (simiary to the arrangements in other countries, e.g. the United States). As a guarantee for the iabiity of counse, any steps on behaf of a party shoud be prohibited where there is authorized counse, etc. A requirement shoud be introduced for the iness of a party or attorney 12 The rues on the operation of the first instance wi be addressed separatey, see beow.

12 70 JUDICIAL ANTI-CORRUPTION PROGRAM invoved in a case to be estabished ony by medica doctors of confidence with the respective court. To that effect, stringent rues shoud be put in pace to reguate not ony the ethics of judges but aso that of attorneys. Rues must be enacted to outaw contempt of court; the existing obstaces to serving summonses and notices on natura and ega persons shoud be removed. Strict egisative action shoud be taken to counter the widespread tendency of the administration and the municipaities to disregard the orders of the court and effective ega iabiity (crimina and administrative) shoud be introduced for faiure to respect court acts. The existing rue of s.296 of the Crimina Code is ceary inadequate to resist this trend which has become disturbing. The so-caed mandamus proceedings shoud be introduced (an institute known to Bugarian ega history and to the modern ega systems in many countries, e.g. the Czech Repubic, Israe, etc.). The idea shoud be discussed of setting up speciaized abor courts that shoud act as a soe fast-track instance (two instances shoud ony be provided for some very important categories of abor disputes), with a possibiity for review by the Supreme Court of Cassation (the principe of seection shoud appy here as we) Changes in procedure at first instance Procedure at first instance shoud be seriousy revized. At present, the parties tend to discose their cases step by step and any new submission or objection by one of them forces the court to grant eave for counteraegations by the other party. The procedure thus gets procrastinated. Moreover, the parties are abe to keep their trumps for the ast minute of the procedure at first instance (and with the ibera regime of appeate proceedings, trumps can even be payed on appea). In order to avoid that, the foowing steps are suggested: A compusory exchange of memoranda between the parties shoud be required before an open hearing is schedued. The parties shoud be obiged to make (or otherwise be precuded from making) a their reevant aegations and induce any evidence at their disposa, incuding authenticated depositions by individuas who coud be summoned as witnesses (if there are new rues on the invovement of experts in the proceedings, they shoud aso be required to provide beforehand their expert opinions on the case). There shoud be a doube exchange of papers. Thus, before the parties appear in the courtroom for an open hearing, they wi have discosed a their possibe aegations and evidence. Of course, the existence of such a system requires an effective and working system of ega aid for the peope unabe to engage in ega proceedings on their own account because of financia constraints. One possibe effect of that approach woud be a arger number of settements aready at the outset of the process. Depending on the

13 71 evidentiary materia coected prior to the court stage, the court shoud have the power to instruct (or obige) the parties to resort to mediation or conciiation with the hep of quaified experts. This coud make even arger the number of settements (especiay if the facts of a case are more compex than its ega aspects). At the same time, account shoud be taken of the potentia for corruption that woud be inherent in that arrangement. Such a framework woud hep root out the attitudes dating back to the cassica period of adversaria proceedings, viz. to fight with a forces and means and to use the procedura possibiities to the maximum extent, even though the factua and ega aspects of the case are cear from the outset. It is necessary to rethink the rues concerning the statements by the parties to a case. The current situation where the parties can factuay concea truth or state untruth in the process without any attaching iabiity is grossy unacceptabe from the point of view of modern requirements. In particuary, the rue of s.114 of the Code of Civi Procedure shoud be reworded as it currenty excudes the possibiity for a defendant who is a ega person to answer questions. Any opportunity shoud be excuded to submit evidence (other than newy-occurred facts or newy-discovered or newy-created evidence within the meaning of s.231 of the Code of Civi Procedure) after the exchange of memoranda and papers between the parties. That, however, shoud be effected by way of precuding the possibiity to induce evidence ater, rather than by imposing sanctions (as the atter are usuay inadequate). The rues on the various types of evidentiary means shoud be updated. This is especiay reevant in ight of the atest technoogica deveopments, e.g. the arge-scae use of the Internet, the introduction of e-signatures and e-commerce. On the other hand, though, abuse of the existing rues has reached disproportionate dimensions. Such abuse is an essentia too that benefits corruption. The roe of expert witnesses in the proceedings shoud be reconsidered. It is no secret that the existing form of invovement of experts in the process is a major technique whereby a judgment can be obtained for a given party, at odds with the facts and the aw. On the other hand, the provision of s.291 of the Crimina Code is far too narrow and fais to provide a decent ist of possibe forms of bad-faith conduct by the experts. It is high time to aso introduce an ethics code for experts. Proposas have been made as we to rey on the experience of common aw systems in invoving experts: each party coud draw in an expert who provides an opinion and the fina assessment woud be in the hands of the court. Initiay that woud certainy make the work of the courts more difficut but it seems to be the ony possibe exit from the current practice. The rues on the modifications of the caim shoud be changed and there shoud be an expicit mention that a paintiff may modify or compement his or her caim. The rues on keeping minutes at open court hearings shoud be

14 72 JUDICIAL ANTI-CORRUPTION PROGRAM reformuated. Given the modern technica methods of recording the statements made by parties, witnessed and experts, it is no onger thinkabe for proceedings to be recorded under the dictation of the president of the pane (or of the judge). This is especiay inopportune with respect to witness testimony as witnesses face crimina iabiity for fase statements 13. The provisions shoud be improved on the award of costs and expenses and it shoud be provided that reasonabe expenses for counse (or for the invovement of experts, if the rues on experts are modified) sha be subject to reimbursement; the fippant requirement that expenses shoud ony be incurred to pay one counse shoud be removed. An express possibiity shoud be provided to recognize contingency fees - for exampe, one coud think of awarding such expenses on a conditiona basis, the expense shoud then be proven or agreements to retain counse, authenticated by a notary, coud be recognized. Minimum rues shoud be introduced on the so-caed cass actions. The rues on fast-track proceedings shoud be revisited, incuding those on appeas against deays. Such appeas shoud be odged with the president of the court where the case is pending and this route shoud aso be avaiabe in proceedings before the Supreme Court of Cassation (if the current workoad of that institution remains unchanged) Summoning and serving notice The rues on summoning and those on serving notices shoud be fundamentay revised. The initia summoning for hearings shoud be based on new rues. The requirement that the initia summoning of a ega entities is to take pace at the address of their management shoud be refined. As regards natura persons, there shoud be a rue on the situation where the summonsing officer is physicay unabe to contact the addressee of the summons as the entrance of the buiding is not readiy accessibe (e.g. in estates with heightened security arrangements where the access of outsiders is prohibited). The person who signs the summons shoud be required to enter in it a his or her names and the address, regardess of the capacity in which they receive the summons (for that purpose, even an amendment to the existing framework coud empower the summonsing officer to check the signatory s identity papers). Serious iabiity shoud attach to any faiure of summonsing officers to issue the summons as prescribed by aw. It shoud be expicity 13 There is a very good probabiity for someone sentenced for perjury based on court hearing minutes drawn up under the dictation of the president of the chamber to succeed in proceedings against Bugaria before the European Court of Human Rights for the existence of such a rue.

15 73 provided that such offences woud entai discipinary dismissa. This proposa is based on the existing widespread practice of summonsing officers to receive bribes in order to fai to summon a party propery, and those bribes argey exceed the fine they face (50 Levs). At the same time, the profession of summonsing officers does not require any specia quaification and there are many unempoyed peope who coud perform those functions. Where the case is adjourned and the next hearing is not immediatey schedued, the party shoud take care to inform itsef of the date of the next hearing (to obviate the possibe abuse by judges acting in bad faith, a minimum period of 10 or 15 or any other number of days between the date of scheduing the case and the date on which the actua open hearing takes pace coud be envisaged, so that parties woud not be forced to inquire every day). The pronouncement of judgments in civi cases coud take pace in an open hearing (and in ine with the principe described, and with the faciity proposed above, a party shoud keep track of when the hearing is to be hed). In that situation it woud become unnecessary to serve the party with notice that the text of the judgment and its reasons are ready as that is a major factor contributing to procedura deays. In addition, pronouncement in an open hearing woud mean that the judge wi face both parties, when deivering the judgment, as opposed to the parties earning about the judgment from the court registers. After a carefu examination of the existing interna reguations and taking account of the reevant internationa instruments, a rue shoud be introduced that if an individua cannot be found at his or her permanent address for more than 15 days, the summons shoud be eft at the municipaity in question and the summoning shoud be deemed reguar. The introduction of a radica rue shoud be considered, namey that once a party has been propery summoned for the case, that party shoud bear the burden of informing itsef about the deveopment of the proceedings up to their end at a reguar instances. This woud certainy require the suppy of technica equipment and faciities for the remote provision of information to those citizens who need it Coatera proceedings and enforcement It is urgent to uphod the rights of those seeking protection in coatera and enforcement proceedings by aowing review by the Supreme Court of Cassation (as restricted and seective as that review might be). In reation to that, the foowing steps are suggested: The rues on aowing and obtaining coatera shoud be fundamentay changed. It shoud not be forgotten, though, that security may be necessary regardess of the type of action brought; such a need exists aso where the effects of a ega proceeding coud entai secondary ega reationships.

16 74 JUDICIAL ANTI-CORRUPTION PROGRAM Tthe grounds for enforcement shoud be reconsidered (e.g. is it appropriate to maintain grounds for enforcement ike the ones in s. 237(e) of the Code of Civi Procedure (ike promissory notes). Such grounds for enforcement may enabe horrific abuse whie the instruments isted in the provision are not used for their key functions as prescribed by aw. The rues on enforcement shoud be entirey revised. The existing provisions on the different methods of enforcement are in a competey intoerabe shape - the paradigm needs to be changed. The ony acceptabe modern soution about forecosure is to have auctions with open bidding, couped with an unrestricted right to submit bids. It is compeing to discuss and introduce private enforcement (due consideration being given to the rights and wrongs of the rues on private notaries). As to the specific proposas for reform in civi procedure, a contradiction comes to ight when that matter is anayzed. On the one hand, the proposed reform is aimed at curbing and combating corruption in the area of civi procedure and civi aw. On the other hand, some of the proposed options for a new framework of civi procedure may be expected to give rise to new sources of corruption. It coud be safey assumed that giving the courts wider freedom (seective pronouncement of the Supreme Court of Cassation, etc.) woud generate such new hubs of corruption. Nonetheess, the buiding up of a system of a high-quaity and effective civi procedure shoud be given priority, as the very fact of its existence woud serve as a guarantee that corruption wi be reduced and fought against.