TBP Legal and Business News - February 2013


TBP Legal and Business News - February 2013
TBP Legal and Business News February 2013

Attention! The deadline for reorganization of business of health insurance companies is approaching

Less than six months remain until the deadline, 6 August 2013, by which existing Bulgarian companies for voluntary health insurance must:

• Ensure compliance with the requirements of the Bulgarian Insurance Code, including increase of their minimal guarantee capital and their registered share capital to 4,6 million leva; and
• File an application to obtain a licence for contracting "Sickness" or "Sickness" and "Accident" insurances.
• By no later than one month after the deadline, health insurance companies may:
• Apply before the Bulgarian Financial Supervision Commission for approval to reorganise through merger into an insurer with a licence to carry out insurance under Section II of the Annex 1 to the Bulgarian Insurance Code (i.e. to engage in the underwriting "Sickness" and "Accident" insurances); or
• Apply before the Financial Supervision Commission for approval to transfer their entire portfolio of health insurance contracts to an insurer underwriting “Sickness” respectively “Sickness” and “Accident” types of insurances, and to terminate their business; or
• Terminate business operations in compliance with the Insurance Code.

Health insurance companies who fail to timely comply with either of the preceding requirements will become subject of coercive dissolution upon order of the Bulgarian Financial Supervision Commission and in accordance with the Bulgarian Insurance Code.

Significant change in the courts practice as regards compensation of non-pecuniary damages caused by contractual non-performance

On 29 January, 2013 the Supreme Court of Cassation adopted Interpretative Resolution № 4/2012 which changes the existing practice of Bulgarian courts that non-pecuniary damages are not compensated in cases of non-performance of contractual obligations.

According to said Interpretative Resolution of the Supreme Court of Cassation:

• Non-performance of contractual obligations can cause non-pecuniary damages;
• Non pecuniary damages caused by non-performance of contractual obligations shall be compensated similarly to those caused by torts;
• Some newly adopted amendments in the effective legislation in the past few years provide for compensation of non-pecuniary damages in certain specific cases of contractual non-performance (some cases of non-performance of obligations of employers, tour operators/ tourist agents, etc.), which demonstrates a new legislative approach towards compensation of non-pecuniary damages in cases of contractual non-performance.

Since the Interpretative Resolutions of the Supreme Court of Cassation are obligatory for all civil courts in Bulgaria, the above mentioned resolution is expected to change the trends in the courts practice and cause more claims for compensation of non-pecuniary damages to be raised.


Validity of authorisation for termination of employment confirmed

On 11 January, 2013 by adopting Interpretative Resolution № 6 the Supreme Court of Cassation abandoned the existing trend of the predominant court practice regarding the rights of the employers’ legal representatives to delegate their powers for termination of employment relations with its employees to third persons by virtue of an explicit power of attorney.

Prior to the adoption of the Interpretative Resolution, courts predominantly ruled that employers’ legal representatives are not allowed to delegate their powers to dismiss employees, except in the cases of disciplinary dismissals.

As a result, terminations of employment effected by persons authorised by power of attorney were declared invalid by the courts without further hearing.

The new interpretation of the employment legislation provided by Supreme Court of Cassation entitles the employers to validly authorise third persons (other than those, representing the employer by virtue of law) to issue orders for termination of employment of their employees when necessary, regardless of the grounds for termination.

TBP Legal and Business News - February 2013