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Division of Assets: Divorce

Investing or moving to Bulgaria poses the question of property relations between foreign spouses and whether the legal status of real estate properties and other assets in Bulgaria differs from the status of the rest of the property of EU citizens located outside Bulgaria. We have referred to this theme in terms of inheritance, so it is time to lighten it up from the perspective of marriage and divorce as well.

The two Bulgarian statutes applicable to this subject are the Bulgarian Family Code and the Code of the International Private Law (CIPL). In order to understand them, however, we need to construe in some more detail the relevant provisions. I am sure that you will find the reasons self-explanatory.

The CIPL determines the applicable choice of law to relations involving international element. According to Article 79, Paragraph 3 of this Code the property relations between spouses are to be governed by the law, which is applicable to their personal relations. Referring to Paragraph 1 of the same Article, this applicable law shall be the common law of their country of origin (their national law – the so-called lex patriae). It sounds easy, but is not. This rule is subordinate to some mandatory provisions of the Bulgarian family law, the main principle of which states that every property that has been acquired during marriage, nevertheless by one of the spouses or by both of them acting together, shall become part of the “common matrimonial property”. The provisions interpreted in their entirety or more precisely the collision of the two said provisions is resolved through the general rules of Article 45 and Article 46 of the CIPL. They stipulate two main principles, which have priority in respect of rules that contradict them.

1) No foreign legal rule, which is determined under the CIPL to be applicable to a certain relation, can be applied effectively, if it manifestly contradicts the Bulgarian rules of public order; and
2) The provisions of the Code may not affect those legal provisions in other Bulgarian laws that are of nature and importance, which make them mandatory.

Based on the premise of the above two principles we may submit that the matrimonial relations – both personal and property, are traditional values highly protected by the Bulgarian law. Therefore, most of the legal provisions of the Family Code, including the above said principle of the “common matrimonial property” are mandatory and have to be observed in terms of property relations between spouses in respect of properties, located in Bulgaria.

This is why we often advise our clients that they do not necessarily have to be present in Bulgaria, together with their spouses to finalise a purchase – one spouse is enough, and regardless, whether they seek it or not – a real estate purchased in Bulgaria during marriage, shall immediately become “common matrimonial property”. This is also the reason why those notorious Marital Status Declarations are filled in every time at the notary.

It is interesting that the provision of Article 79, Paragraph 4 of the CIPL allows spouses to choose the applicable legislation to their property relations between each other. With view of the above, however, we submit that only the future court practice implementing the still relatively new Code will show how freely this right to choose may be used and whether it will be enforceable against the mandatory family-legal provisions. We strongly believe in their non-enforceability

The divorce between spouses of one and the same foreign citizenship shall be governed by the law of the state of the nationality of the spouses upon filing the application for divorce (Article 82 of the CIPL). At the same time provisions of Articles 7 and 8 of the CIPL stipulate that the Bulgarian court will be competent to pass judgments on marital claims and claims related to property and personal relations between spouses not only when one of the spouses is a Bulgarian citizen, but also when the habitual residence of any of the spouses is in Bulgaria. Based on the principle embedded in this clause, as well as on the general principles of the provisions of Articles 45 and 46 of the CIPL, we may conclude that, if not obligatory, the provisions of the Family Code governing the settlement of property relations between the divorced could at least be applied if the spouse, living in Bulgaria, finds them more favourable. It is worth noting that the Bulgarian family law provides protection for the divorced parent who had been granted the parental rights – such parent may be granted the right to use the common home while he/she raises the children for example. Also, under Bulgarian law the property of the spouses is split equally between divorcees, unless any one of the spouses manages to prove exclusive contribution for the obtaining or increasing of certain property.

The Bulgarian law remains silent on the question, whether the shares of a spouse in a company represent “common matrimonial property” under the general principle applicable to all assets acquired during marriage, but the Supreme Court of Cassation has asserted in its constant practice that shares represent personal property of the spouse – shareholder and not “common matrimonial property”. Still this presumption may be rebutted under the legally provided possibility to prove exclusive contribution.

Trying to ascertain the applicable law vis-à-vis property relations in marriage and at divorce between spouses – foreigners on the territory of Bulgaria reveals the inefficiency and ambiguity of the CIPL, but we may conclude after all that the spouses may organize the application of the law they choose – either with a mutual agreement or by choosing the court before which they will file their claim. In all cases however they must take into consideration those legal rules of the Bulgarian Family Code, which are designed to protect the weaker party or at least to ensure equality of the spouses and therefore will be mandatory to apply to assets acquired on the territory of Bulgaria.

Roumen V. Petrov
Asya Mandjukova
GPNG Law Firm, Sofia.