Settling a commercial dispute out of court in Bulgaria: mediation, limitation, confidentiality and when the settlement is enforceable

Iva Petkova, attorney · Published 2 November 2026 · 7 min

A commercial dispute with a counterparty, supplier or fellow shareholder often costs more time and money than the amount at stake. Settlement and mediation can resolve it in weeks, but only if the agreement is enforceable and leaves no open questions. We explain what Bulgarian law provides and where the costly mistakes are made.

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A commercial case can go through three instances and last years. The court fee on the statement of claim alone is 4 per cent of the value of the claim (Art. 1 of the Tariff of State Fees Collected by the Courts under the Civil Procedure Code): for a claim of EUR 500,000 that is EUR 20,000, before lawyers' fees and expert reports. So in a commercial dispute the question is often not whether to seek a settlement but how to get there without losing time under the limitation period or ground in the dispute, and how to enforce it if the other side does not pay.

Settlement or mediation

A settlement is a contract between the parties: through mutual concessions they end an existing dispute or avoid a possible one, and may also create, amend or extinguish legal relationships outside the dispute (Art. 365 of the Obligations and Contracts Act). It can be negotiated directly, between the parties' lawyers.

Mediation is a voluntary and confidential procedure in which a third person, the mediator, helps the parties reach an agreement (Art. 2 of the Mediation Act). The mediator does not impose a decision (Art. 6) and may not give legal advice (Art. 10(1)). The parties take part in person or through a representative with a written power of attorney, and lawyers and other specialists may also take part (Art. 12). Mediation helps where direct negotiations have stalled, where the parties will keep working together, for example as supplier and customer or as shareholders, and where the solution they need is more flexible than anything a court can order.

The mediation clause in a commercial contract

The parties' consent to resolve a future dispute by mediation may be agreed as a contract clause, but it does not prevent a party from bringing a claim in court (Art. 11(5) of the Mediation Act). Where such written consent exists, the court in any case invites the parties to resolve the dispute by mediation, unless there is an obstacle (Art. 140a(4)(1) of the Civil Procedure Code). In consumer and employment disputes consent is effective only if given after the dispute has arisen (Art. 11(6) of the Act); between businesses the clause can be agreed in advance.

A clause is worth having when it is specific: who appoints the mediator and how, the language, whether the mediation takes place in person or online, the time allowed for the attempt and who bears the costs. A general phrase such as "disputes will be resolved by negotiation and mediation" rarely helps once the dispute has arisen.

Limitation during negotiations and mediation

Negotiations alone do not stop the limitation period. Mediation does: limitation does not run while the procedure lasts (Art. 11a of the Mediation Act). The procedure is deemed to start on the day the parties expressly agree to begin it (Art. 11(2)), and besides an agreement it ends on the refusal of either party, by mutual consent or 6 months after it started (Art. 15(1)). The date of consent must therefore be clear and provable, and time limits must be watched after the mediation ends.

If the debtor acknowledges the claim in a settlement or a letter, the limitation period is interrupted (Art. 116(a) of the Obligations and Contracts Act) and a new one begins. Failed negotiations in which the debtor acknowledges nothing give no such protection.

Confidentiality

Discussions in mediation are confidential: participants must keep secret the circumstances, facts and documents they learned in the procedure, including at the information session (Art. 7(1) of the Mediation Act). The mediator may not be examined as a witness about matters entrusted to him or her without the express consent of the participant who disclosed them (Art. 7(2)). The exceptions are narrow; one of them is disclosure of the agreement's content where needed to enforce it (Art. 7(3)).

How the agreement becomes enforceable

The agreement may be oral, written, or written with notarised signatures, and the parties may provide in it for liability for non-performance (Art. 16 of the Mediation Act). It binds only the parties and is void if it is contrary to or circumvents the law or offends public morals (Art. 17). Signing it, however, does not by itself allow enforcement. There are two routes:

• court approval: an agreement on a legal dispute reached in mediation has the force of a court settlement and is subject to approval by a district court; where the dispute is the subject of a pending case, the court hearing that case approves it, even if the parties have also settled matters outside the case, and where there are several pending cases, the court of the first case filed (Art. 18(1) to (3)). The court approves the agreement if it is not contrary to law or public morals (Art. 18(4)), and a court settlement has the effect of a final judgment (Art. 234(3) of the Civil Procedure Code);
• notarised signatures: a settlement or other contract with notarised signatures is a basis for applying for an order for immediate enforcement of obligations to pay money or other fungibles and to deliver specific things (Art. 417(1)(3) of the Code).

An agreement with neither is an ordinary contract. If the other side does not perform, what remains is a new lawsuit, this time on the agreement.

If a case is already pending

In commercial disputes over commercial transactions the court may order the parties to attend an information session on mediation in person, whatever the value of the claim, where it considers the dispute suitable (Art. 140a(1)(11) and (2) of the Civil Procedure Code). The case is not stayed, but by mutual consent the parties may ask for a stay while the meetings take place (Art. 140b(1) and (3)). Where the case ends in a court settlement, the claimant recovers half the court fee paid; where the court approves an agreement reached in mediation, 70 per cent; and where the mediation took place at the court's mediation centre after a mandatory information session, 85 per cent (Art. 78(9)). On a fee of EUR 20,000 that is EUR 10,000, 14,000 or 17,000.

Cross-border disputes

The Mediation Act also applies to cross-border disputes (Art. 3(1)). Mediation can be conducted in English or another language, and online, if the parties agree. Where the agreement may have to be enforced in another country, its form and the route to enforceability should be settled before signing, not after a default.

Where a lawyer changes the outcome

• before negotiating: a realistic assessment of the position, the evidence, the likely outcome in court and the costs, without which no one can say which offer is reasonable;
• on timing: whether to seek interim relief or file a claim first, so that the limitation period does not expire or the debtor does not dispose of assets while talks go on;
• in the contract: a mediation clause that actually works when the dispute arises;
• in the text of the agreement: amounts, deadlines, instalments, security, liability for non-performance, costs, and which claims each party waives;
• in the form: court approval or notarised signatures, so that the agreement can be enforced.

Petkova & Minkov Law Firm handles commercial disputes and mediations. Attorney Iva Petkova is a registered mediator and Attorney Filena Pavlova is a certified mediator. Where we represent neither party, we can conduct the mediation; where we represent one of them, we act as its counsel in a mediation before another mediator. We work in Bulgarian, English, Russian and German, from an office next to the Palace of Justice in Sofia.

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