Reporting on the most interesting recent developments in Bulgaria Gugushev & Partners Law Office Senior Partner Dafinka Stoycheva shares her views on continuing political instability in the country, a major investment dispute, and significant legal and regulatory developments.
"Politics in Bulgaria is incredibly complicated at the moment, impacting all spheres of public life," Stoycheva beings. "We had parliamentary elections in early June, yet there is still no regular government in place. This has been the case for the past two years, as no single party has been able to secure a majority, and coalition efforts have consistently failed – we are likely headed for new elections soon, potentially in September, as the creation of a majority government isn't forthcoming," she explains. This political uncertainty affects authorities and their decisions, including ongoing proceedings initiated under previous governments.
Stoycheva reports a significant investment dispute involving Nexo, a crypto lender. "The value of the claim is substantial – around USD 3 billion. Nexo is seeking damages due to what they allege are the state’s wrongful and politically-motivated actions, including unjustified criminal investigations," she explains. "This has become a high-stakes dispute for Bulgaria. Nexo claims that the negative publicity of the investigations led to the termination of contracts and significant financial losses," Stoycheva adds.
To respond to the dispute, according to Stoycheva, the Bulgarian government "launched a public procurement procedure to handle the legal defense, which is crucial given the dispute's magnitude and its potential impact on the state's reputation. However, as of the end of March, when applications for the legal tender happened, there have been no further developments. Nothing has been announced, and no one has been contacted." According to her, this delay creates "risks regarding the preparation of an appropriate legal defense and raises concerns about the transparency of the procedure."
Furthermore, Stoycheva reports an interesting recent ruling by the Supreme Court of Cassation. "The Supreme Court of Cassation recently recognized the right of certain partners to act as ad hoc representatives in cases where mergers are stipulated to be handled jointly by them. This ruling references Article 13 of the European Convention on Human Rights." As she explains, the decision is "significant because it allows these partners to protect company assets in future cases. This new practice could resolve numerous issues for many companies."
Additionally, Stoycheva reports that "Bulgaria has updated its AML regulations to align with EU standards – these changes include regular risk checks and new transfer protocols for AML tasks. Companies must now verify the proxies involved and report incorrect ownership information, particularly for those handling virtual assets; moreover, new restrictions have been imposed on individuals in specific AML roles." These updated regulations were published on July 16, and, "although the implementation is delayed for July 2027, many investors outside of the EU already started to worry about their doing business in the country."
Finally, Stoycheva shares that the "ongoing political instability and significant legal disputes present challenges but also opportunities for Bulgaria to refine its legal framework and governance. The Nexo case, in particular, underscores the need for transparency and efficiency in legal processes." Meanwhile, Stoycheva feels that the Supreme Court's ruling and updated AML regulations "demonstrate progress in aligning with international standards and protecting business interests. Ultimately, these developments could lead to a more robust and fair legal environment in Bulgaria."
