What is the limitation period?

One of the functions and objectives of the legal system is to ensure the realisation of a set of rights and the protection of citizens' interests. This guarantee is expressed in various mechanisms that can be applied to protect these rights in the event of their violation. For example, the law has made it possible to terminate a contract, claim compensation for damage caused or reimburse undue expenses incurred. However, in order for this protection to take place, in order for just and lawful order to be restored, it requires activity, and action, the assertion of claims rather than inactivity on the part of the subject of a right.

The purpose of limitation period as a legal institute is to induce the creditor to seek his claim from the debtor in order to extinguish the legal relationship between them. Otherwise, the debtor could be ordered to perform decades after the claim arose. For example, in the case of a large indebtedness, the debtor has no incentive to accumulate assets that can be seized or repossessed and thus civil circulation is delayed.

The limitation period is a common institution for many legal systems, which recognise it in its varieties (cf. § 194 of the Bürgerliches Gesetzbuch for Germany, § 933 of the Allgemeines bürgerliches Gesetzbuch for Austria), a brief enumeration of its main characteristics and a non-exhaustive list of the different limitation periods under Bulgarian law will be of practical use to anyone who wants to seek protection of his rights in Bulgaria. Our experience has shown that knowledge of limitation periods, and of the concept of limitation in general, proves extremely valuable in judgment on the possibility of seeking legal redress in Bulgaria. Often the subject of a claim is misled by the familiar limitation period in his own legal order and does not assess the risk of the possibility of a different period in Bulgarian law. For example, the general limitation period in Germany is three years, whereas, for example, the limitation period for personal injury claims is 30 years. Another peculiarity of the limitation period in German law is the beginning of the limitation period - it does not start simply when the claim arises, but at the end of the year in which it arose (§ 199 BGB).

We provide a table to help you navigate the terms and grounds of the limitation periods under Bulgarian law: 

General time limits under the Bulgarian Obligations and Contracts Act

The general limitation period under Bulgarian law is five years (Article 110 of the Obligations and Contracts Act). This is the main provision governing the so-called limitation period, which is a statutory time limit at the expiry of which the holder of a claim ceases to be able to obtain enforcement satisfaction from its debtor. After the expiry of this five-year period, the creditor loses the possibility to pursue his claims in court. If the creditor sues in court to obtain what is owed, the debtor may object to the expiration of the five-year limitation period and the court will dismiss the action. After the expiry of the limitation period, rights and obligations continue to exist, and become so-called natural obligations. If the debtor nevertheless pays after the limitation period has expired, what he has paid is not undue and he cannot claim it back.

Some of the more specific three-year time limits are set out in Article 111 of the OCA. These include:

• claims for remuneration for work for which no other limitation period is provided - it is important to specify here that these are not wages under employment contracts. Their limitation period is regulated by the Labour Code, and the OCA covers wages under civil contracts, construction contracts, for example, a publishing contract, a contract for public representation, a contract for translation, etc.
• claims for damages and penalties for breach of contract - all claims for damages arising from breach of contract are extinguished after 3 years;
• periodic payments - this rule covers all periodic payments, which could be for rent, telecommunications or utility payments, for example. Also included are penalties and interest, such as monthly charges;
• Also, the three-year limitation period is the general rule in actions for the avoidance of contracts, with the exception of avoidance for reasons of financial duress under clearly unfavourable terms (where a one-year period is provided for).

For money claims against natural persons, the legislator has provided for an absolute limitation period of ten years (Article 112 of the OCA). It was adopted in 2021 and will only take effect in 2031. Its purpose is to exempt so-called "perpetual debtors", i.e. persons with hard-to-collect debts, from being parties to enforcement proceedings for years. Absolute prescription is not susceptible to interruption, except where the debt is deferred or rescheduled. At the same time, however, a number of exceptions to this rule are listed, so that this ten-year limitation period does not apply to claims arising out of the commercial activities of sole traders or natural persons who are partners in a limited liability company, claims for tort, unjust enrichment, alimony, wages, compensation under the Labour Code, claims arising out of a privatisation transaction or property restituted under a statutory instrument.

All these time limits are imperatively regulated and the parties may not agree to shorten or extend them or to waive the limitation period before it has expired (Art. 113 of the OCA). That is to say, the parties may not agree between themselves that limitation periods will not run or that they will be of a duration other than that prescribed by law for this type of obligation.

The general rule of Art. 114, para. 1 of the OCA on the starting moment from which the limitation period begins to run is that it is the day on which the claim became due. Furthermore, it is also settled when the limitation period starts to run for claims for which no due date has been agreed, but which only become due by invitation to the debtor. In that case, the limitation period starts to run from the moment the debt is incurred and not from the moment of the invitation. In the case of a tort, the limitation period begins to run when the tortfeasor is found. In the latter case, the limitation period begins to run from the last day for which a penalty is charged.

Something that needs to be pointed out is that between certain categories of persons this limitation period may not run. As long as they are in a relationship of children and parents, spouses, guardians or between a manager and a commercial company. It is only when they cease to exist in that capacity that the period starts to run again or starts to run - a conclusion from Art. 115 of the OCA. Also, if a creditor brings an application against his debtor, the limitation period for the claim does not run until the court has ruled. And if a claim is made in part, under Art. 116a of the OCA the limitation period is suspended or interrupted only for the part claimed. Depending on the judgment, the limitation period may be continued from where it was interrupted by the filing of the action, and, if it is found in favour of the creditor, enforcement may be proceeded with, which action must also be taken within five years of the judgment becoming final.

The limitation period may be interrupted in addition to being suspended. The difference is that in the case of suspension the limitation period does not run, it is "frozen" and if the reason for the suspension ceases to exist (the court grants the claim), the limitation period continues to run from where it was suspended. In the case of interruption, the limitation period starts anew and the period prescribed by law must run anew. Such interruption is regulated by the legislator in three hypotheses, namely:

• the acknowledgement of the claim by the debtor - i.e. the debtor acknowledges in writing or in any other credible way the obligation to the creditor. In the case of a tenant, if the tenant admits in the second year that he owes you rent payments, the statute of limitations is interrupted and you have the statutory defence of a further three years, not just the remaining year until the three-year limitation period expires
• By filing a claim, an objection or a request to initiate conciliation proceedings. What is specific here is that if a claim is unsuccessful, or if you have failed to conciliate out of court, these limitation periods are not considered to be interrupted, but continue to run and extreme care must be taken not to miss the opportunity to legally protect your interests
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• By taking enforcement action is the third hypothesis in which the limitation period is interrupted. As mentioned above, if you have an enforceable judgment or any non-judicial enforcement, then the commencement of enforcement action suspends the limitation period as you are deemed to have taken action to protect your rights.

Other specific limitation periods in the OCA are provided for the invalidation of contracts, the termination of contracts, for sale and purchase, the contract for workmanship, etc.

Other limitation periods in commercial and insurance law 

In Bulgaria quite often promissory notes are issued as one of the most common securities in the country. For security reasons and the speed of turnover flow, a short three-year limitation period is established for claims against payers with a bill of exchange / promissory note - Art. 531 (1) CC. The deadline starts from the due date or the time of filing by the creditor and consequently the refusal of the payer to pay the amount due.

In forwarding contracts (contracts where the freight forwarder shall (against remuneration) conclude a contract for the carriage of cargo, in their own name for the account of a client) claims for damages shall be extinguished after a brief one-year limitation period - Art. 366 CC.

The general limitation period for damages claims under a transport contract is also a year - Art. 378 CC.

Of interest in the international exchange of goods is also a limitation period provided in the Convention on the Contract for the International Carriage of Goods (CMR), which applies both in Bulgaria and, for example, Germany. Claims related to the transportation of goods, governed by CMR, are extinguished upon expiration of a one-year limitation period. However, in case of fraud or an error equated to fraud, the limitation period is three years.

The terms under insurance contracts are also specific. The rights and obligations under the insurance contract regarding insurance compensation shall lapse after three years from the date of occurrence of the insurance event date.

This is the general rule, the exceptions to which are listed below, where the legislature has provided a different limitation period. For example, rights and obligations under the following types of insurance contracts have a 5-year limitation period starting from the insurance date (Art. 378 (2) IC): "Life," "Accident," "Disease" and “Civil liability" insurance. “Civil liability for drivers" is the most common type of insurance in Bulgaria and where a person is compensated under a civil liability insurance, this person has five years, during which to seek protection from state authorities to receive insurance indemnity, not only three, as is generally the case under insurance contracts.

Compliance and monitoring of these deadlines is important not only for the work of attorneys but also for the contractual and non-contractual relationships of each person to be able to benefit fully from the legal protection of their own interests.