The Bulgarian Restitution, the Constitution and the Human Rights

1. Background

In the 40-ies and the 50-ies of the last century, large-scale alienation of privately owned property took place in Bulgaria. Tens of thousands of Bulgarians were affected by the Alienation of Large Urban Real Estate Property law (ALUREPL). The law had a political nature and aimed to limit the size of privately owned property. The law was applied to all citizens regardless of their political or religious views. A second reason for passing the ALUREPL was the shortage of housing after World War ІІ. The ALUREPL was formally in agreement with Article 10 of the Bulgarian Constitution from 1947. At the time of the implementation of the law, Bulgaria has not yet signed the European Convention on Human Rights. Despite the reasons for its adoption, ALUREPL violated the basic rights of those affected by it.

The people whom ALUREPL was applied to preserved the property required to meet their housing and professional needs. The alienation followed a strict procedure, where every piece of property was valued and individual alienation acts were issued. In the so-called “supplementary decisions” the extent of the compensation was settled. The owners were compensated with money in cash, with government bonds or with another piece of real property.

The realty became state property, and was lent to the homeless. During the 50-ies and 60-ies the State adopted Regulative Acts allowing the tenants to acquire the housing and many of them did so. The imperative character of these state acts faced the tenants with two alternatives - to buy the housing they occupied or to stay homeless. In this way, the state sold around 20 000 pieces of real property.  Another part of the realty became property of third parties – private persons, as compensation or by substitution. The property was acquired on the basis of the written contracts concluded between the buyers and the municipalities. Due to the citizens’ low personal income, the payment for the property was completed in tens of years, mostly at the expense of privation and hardship. At the time of the adoption of the Restoration of Ownership of Alienated Real Estate Property Law (ROAREPL) (Restitution law) in February 1992, part of the realty was in possession of forth or fifth owners. Meanwhile, the owners have made substantial investments in the maintenance, reorganization or improvements of their property.

2. ROAREPL and “the Luchnikov” law

The ROAREPL was adopted in a situation of a strong political confrontation. The interests of the original owners (those who owned the property prior to the adoption of the alienation acts) far exceeded the resources available for their fulfillment. The law reflected the will to perform restitution in full, without accounting for the lack of money in the state reserves, and disregarding the actual status of the real property, from a restitution point of view. The law did not provide for centralized administrative verification of the owners’ rights, although the state had at its disposal the cadastral and town planning schemes as well as the document archives.

The real property located in the periphery of the cities has been, in most cases, affected by the construction of new buildings. The situation has been alike with the rural land property, most of which has been altered by the construction of roads, factories or military objects. Third parties - private persons, constructed buildings on many of the small pieces of rural land. Only in the central parts of the big towns the real property remained almost unaltered. A part of the real property, subject to restitution under ROAREPL, has not existed in real borders or its factual status has not allowed for its restitution. The issue for compensation of about 500 000 owners was raised in the Parliament. In 1992 the Parliament adopted the Compensation of Owners of the Alienated Property Law (COAPL). According to that law the owners whose real property is non-existent or for other reasons could not be restituted, should receive the so-called  “compensatory notes.” The market value of the CN makes no more than 15 percent of their face value.

Consequently, as a final outcome of the application of the Bulgarian Restitution laws, the original owners of the existing, and in most of the cases eligible for restitution real estate property received 100 percent of the value of their property, while the rest of the owners with the same, guaranteed by the Constitution rights, received only about 15 percent of the value of their property. This fact could be described only as a fundamental deficiency of the Bulgarian restitution laws. This major weakness has had a strong negative effect on the Bulgarian economy.

The lack of a centralized verification of the owners’ rights caused chaos in the judicial system and the archives. Consequently, the Courts are still blocked with thousands of legal claims, many of them ill grounded. Hundreds of vital documents were removed from the archives by a part of the involved citizens. Thousands of people spent months and years in the archives in search for documents, often in vain.

3. Overview of the Bulgarian restitution

The way Bulgaria carried out the restitution of realty negatively influenced the process of privatization and hampered the participation of strategic investors in this process. In the beginning of the restitution process, the Bulgarian agriculture almost ceased its production. At a time, when the rest of the former socialist countries adopted laws guaranteeing fast and effective privatization and economic growth, Bulgaria got stuck in the swamp of never-ending restitution. For example, the Czechs returned the rural land in shares, preserving the cooperative form of organization. While the Bulgarians continued their search for the real borders of their small pieces of land, the Czechs preserved the actual volume of their agricultural output that existed in the beginning of the democratic reform. The end of the restitution process in Bulgaria is still ahead. At the same time, we can see that the restitution metastasis is spreading over the neighboring countries.

4. Article 7 of ROAREPL   or how bona fide acquired property is “restituted”

Those most hurt by the genetic defects of the Bulgarian restitution laws are the defendants in the cases under Article 7 of the first restitution law – ROAREPL. Article 7 of that law is intended to regulate the “restitution” of property owned by third parties - private persons. Although consisting of only a few words, due to the importance of its subject, Article 7 has the meaning of a separate law. Meanwhile, the large number of interpretations of Article 7, made by the Supreme Court (now Supreme Court of Cassation), if systematized, may form an entirely new legal order that regulates the confiscation of the real property owned by third parties – private persons. The larger part of the almost 20 000 appropriators of realty, most of them defendants under Article 7, are bona fide owners. The principle of bona fide ownership is embedded in the laws of all countries around the world. In general, a law that involves in the restitution process property acquired by bona fide ownership is in essence a confiscation law. 

With Article 7 of ROAREPL the lawmaker allowed the original owners to claim directly against the third parties. This permission was in flagrant violation of one of the fundamental provisions of the Bulgarian Constitution concerning state liability.  According to Article 7 of the Constitution in force, as well as according to similar provisions of the Constitutions from 1947 and 1971, “the state shall be held liable for any damages caused by the illegitimate acts or rulings on the part of its agencies and officials”. The procedures under Article 7 are based on imputing the guilt (responsibilities and liability) of the State, related to the mass realty alienations in 40-ies and 50-ies, to single private persons (in our case owners of part of that realty). The transfer of these explicitly state responsibilities (guilt) is carried out by putting the owners at the bar. During the hearings, which could be described as “blame transfer procedures” the defendants are additionally charged with segments of the total blame. In fact the procedures under Article 7 are designed to convince the defendants of their nonexistent “guilt”. The authorities frequently explained to the defendants that the municipalities were not in the position to sell them the real estate property, or that mistakes and discrepancies were found in their property-related documents that made their contracts null and void. All these assertions could hardly explain why bona fide owners are deprived of their property. 

Regardless of its civil and legal form, Article 7 essentially has punitive character. Its nature could be described only by using the criminal law terminology. The “corpus delicti” of the “crimes”, committed by 20 000 third parties-private persons is that they have bought, received by substitution or as a compensation a state-owned real property. In order to disclose their “guilt” the law sets two rather absurd, due to their formal character, requirements. Actually, these requirements account for half of the text of Article 7. They are supposed to make up for the lack of real factual grounds for the proceedings under Article 7.  According to the first of them, the defendants have to present before the court hundreds of documents in order to prove they have acquired the property in full compliance with nearly 20 “Normative acts”. The Bulgarian “Normative acts” include not only Laws and Codes but also internal instructions for the work of state and municipality organizations. In other words the defendants must submit proofs that the state and municipalities have acted in strict compliance with their internal normative acts. The great part of the required papers has been stored in the central or municipality archives for more than 30 years. Therefore, in many cases the required documents were destroyed or difficult to find. In other cases these papers have been deliberately removed by a part of the involved persons. The second requirement states that there shall be no “Violations of Normative acts” in the course of the acquisition procedures.  Since the law does not explicitly define the above term, it depends entirely on the morality of the court to decide what a “Violation of Normative Act” is, be it a discrepancy or mistake made unintentionally by a state or municipality administrator. On this background, the Bulgarian Court consistently imputes to the defendants the guilt for almost any mistake or discrepancy found in their property related documents - a practice that could hardly pass the requirements of the European Convention on Human Rights.

From a procedural point of view, the unfairness of the law and that of its creators could be recognized more clearly. We can say with confidence that for a period of more than 10 years, the Bulgarian authorities have implemented an unfair and even unworthy way of confiscation of real property.  Generally, at the Courts of first and second instance, the cases under Article 7 end in favor of the defendants. That happens due to the fact that the members of these courts are moral people who understand the real essence of Article 7. The whole truth about the confiscation character of the law could be seen only after the Supreme Court  (Supreme Court of Cassation) has made its decision. More than 95 percent of the decisions of the SC (SCC) are in favor of the plaintiffs. The majority of the defendants, who fall in the rest 5 percent, has achieved their success through giving huge bribes or due to the fact that some of them were related to those in power.

Under Article 7 of ROAREPL the defendants became subjects of a specific procedure, which is in contradiction with fundamental law principles. Both the bona fide ownership principle and the principle of prescription do not hold in their cases. Through ignoring the principle of prescription they are treated as perpetrators of acts against the human race and humanity. (As is known, the validity of the principle of prescription generally supersedes the validity of all other considerations – the only exception to this rule could be found in the international criminal law where it is not applicable in cases against human race and humanity.)

As already pointed out, the administration did not ascertain the rights of the original owners, which was a basic condition for a reasonable implementation of any law. Part of the real property had changed its dimensions and price in the course of the years. The individual acts of the alienation that prove the size of property at the time of the alienation in most cases could not be found in the archives. These acts, as well as other acts certifying the manner and the quantity of the compensation, are frequently removed from the archives by a part of the persons involved. The Court usually takes its decisions solely on the ground of the claims of the plaintiffs. Consequently, the unconstitutional framework of the law does not allow the defendants to make use of their right to fair trial.

A person, unfamiliar with the Bulgarian way of thinking, would ask himself why Bulgaria has not adopted a purely political law. Such a law, would allow the authorities to give back all of the 20 000 pieces of real estate property to their original owners without violating the Constitution. A political law would replicate the procedure under which the property was taken in the 40-ies and the 50-ies. The State would evaluate and alienate the property, define the size and the way of compensation. By replicating the procedures of ALUREPL, such a law would preserve the ownership of the owners of single housings (or substitute it for another equivalent piece of real property). However, in 1992 Bulgaria has already signed the European Convention on Human Rights and alienation of property possessed by bona fide owners for about 40 years would be in a direct contradiction with the basic provisions of this document. On the other hand, even a political law under the surveillance of Europe should provide for a proper, probably based on market value, compensation. However, the state reserves could not provide sufficient funds for such compensation (the sum needed was around 1 billion USD).

5. The consequences

Deeply confused by the abrupt political changes, and still in the process of the democratic changes, the Bulgarian society does not understand the real nature of Article 7. A thesis spread by the interested parties says that the former “nomenclature” has seized the real property. The same supposition, embodied in the very spirit of Article 7 is also an indispensable part of the pretender’s claims. Every claim contains the phrase stating that the defendants or their predecessors have had “political party or social status”. The suggestion for a “property seized by the former nomenclature” is essentially spread over by the citizens involved in the cases and has nothing in common with the real facts. Such suggestion implies that all dispossessed people in Bulgaria in 50-ies and 60-ies were members of the “nomenclature”.  The assumption is the only “moral justification” that allows the original owners and the court to proceed with the cases.

As a consequence of the implementation of Article 7 of ROAREPL, the third parties and owners of single housings are been thrown out on the streets.  The law does not consider the fact that the considerable part of their family incomes for tens of years has been invested in this property. At the same time, the original owners has preserved some property left under ALUREPL or has received compensation and has built at least one more housing or country house. All the more, under ROAREPL they obtain the savings of their fellow-citizens, while the last should stay homeless and ‘compensated’ with compensatory notes, the real value of which could hardly pay for the costs of the legal procedures and lawyer fees.

6. Epilogue

The Bulgarian Constitutional Court rejected several times the requests of the nongovernmental organizations concerning the unconstitutional character of Article 7 of ROAREPL. The court will adhere to its decisions until its partisan members keep their seats.

At the same time, more than 100 000 Bulgarians deeply hurt by the implementation of Article 7 of ROAREPL have not, and never will have, the opportunity for the so called “equal start”. They are “starting” without their single housings, with no savings, threatened by death and illness.