Foreign Investments in Bulgaria

274 Pages·2001·30.305 MB·English

by  Nikolay Natov

FOREIGN INVESTMENTS IN BULGARIA
Nikolay Natov - 978-90-04-48182-4
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Nikolay Natov - 978-90-04-48182-4
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FOREIGN INVESTMENTS
IN BULGARIA
by
Nikolay Natov
KLUWER LAW INTERNATIONAL
THE HAGUE I LONDON I BOSTON
Nikolay Natov - 978-90-04-48182-4
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A C.I.P. Catalogue record for this book is available from the Library of Congress.
ISBN 90-411-1278-2
Published by Kluwer Law International,
P.O. Box 85889, 2508 CN The Hague, The Netherlands.
Sold and distributed in North, Central and South America
by Kluwer Law International,
675 Massachusetts Avenue, Cambridge, MA 02139, U.S.A.
In all other countries, sold and distributed
by Kluwer Law International, Distribution Centre,
P.O. Box 322, 3300 AH Dordrecht, The Netherlands.
Printed on acid-free paper
All Rights Reserved
© 2000 Kluwer Law International
Kluwer Law International incorporates the publishing programmes of
Graham & Trotman Ltd, Kluwer Law and Taxation Publishers,
and Martinus Nijhoff Publishers.
No part of the material protected by this copyright notice may be reproduced or
utilized in any form or by any means, electronic or mechanical,
including photocopying, recording, or by any information storage and
retrieval system, without written permission from the copyright owner.
Printed in the Netherlands
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CONTENTS
PREFACE ...•.•...........•....................••••••.............•..............................•••. ix
INTRODUCTION ............................•.....................•.............................. 1
1: GENERAL MATTERS •....•....•.•.•........••............................................ 3
§ 1. Sources of legal regulation of foreign investments in Bulgaria ........................... 3
I. General characteristics of the legal sources ...................................................... 3
II. International sources: agreements ................................................................... 4
III. Internal sources ............................................................................................... 7
IV. Ratio between the sources ............................................................................ 21
§ 2. Methods of legal regulation of foreign investments .......................................... 25
I. Introductory notes ........................................................................................... 25
II. Application of the direct method of legal regulation .................................... 26
III. Application of the conflict method .............................................................. Z7
2: NATURE OF FOREIGN INVESTMENTS ....................................... 35
§ 1. Definition of foreign investment ....................................................................... 35
I. General definition of foreign investment in domestic sources of PIL ............ 35
II. Special definitions of a foreign investment under the agreements for
mutual promotion and protection of investments ........................................ 38
§ 2. Forms of foreign investment .............................................................................. 39
I. Forms of foreign investment under domestic sources of law ........................... 39
II. Forms of foreign investment under the agreements for mutual
promotion and protection of investments .................................................... 74
III. Investment in objects or activities, for which a concession is granted ........ 77
§ 3. Investors ............................................................................................................ 92
I. The term "foreign investor" under domestic legal sources ............................. 92
II. The term "foreign investor" under international legal sources ..................... 98
3: GENERAL REGIME FOR FOREIGN INVESTMENTS
IN BULGARIA ........................................................................... 103
§ 1. The principle of protection of foreign investments ........................................ 103
l. Sources of legal regulation of the principle of protection of foreign
investments ................................................................................................. 103
v
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vi Foreign Investments in Bulgaria
II. Content of the principle of protection of foreign investments ................... 106
§ 2. Guarantees for foreign investments ................................................................ 109
I. The most favoured nation clause .................................................................. 110
II. National regime ........................................................................................... 113
III. Principle of more favourable treatment (principle of
minimum treatment) .................................................................................. 122
IV. Principle of non-discriminatory treatment of foreign investments ............ 123
V. Principle of priority of international over municipal! domestic law ........... 126
VI. Immunity of foreign investments (stabilisation/freezing clause) ............... 131
VII. Protection against expropriation for foreign investments ........................ 136
VIII. Securing arrears accrued in favour of foreign persons including
those occurring in consequence of foreign investments ............................. 148
IX. Opportunity for free repatriation of earnings derived from foreign
investments made in Bulgaria ..................................................................... 150
X. Subrogation .................................................................................................. 157
XI. Preferential procedure for the settlement of investment disputes ............. 160
XII. Other guarantees for foreign investment .................................................. 175
§ 3. Registration regime of foreign investments .................................................... 185
I. Sources oflegal regulation ............................................................................. 185
II. Obligation of registration of foreign investments ........................................ 185
III. Competent state bodies before whom the registration of foreign
investments is made .................................................................................... 190
IV. Terms for registration of foreign investments ............................................. 192
V. Formal requirements for registration of foreign investments ....................... 193
VI. Non-performance of the obligation to register foreign investments ......... 201
4: SPECIFIC PROVISIONS REGARDING FOREIGN INVESTMENTS
IN BULGARIA ........................................................................... 205
§ 1. Permissive regime for foreign investments in Bulgaria ................................... 206
I. Nature of the permissive regime .................................................................... 206
II. Sources of legal regulation of permissive regime for foreign investments ... 206
III. Subjects of the permissive regime ............................................................... 207
IV. Objects of the permissive regime ................................................................ 209
V. Competent state bodies that issue the permit .............................................. 217
VI. Procedure for giving permission ................................................................. 222
VII. Consequences of non-observance of the requirements of the
permissive regime under Art. 5 para. 3 of the Investments Act.. ............... 226
§ 2. Legal promotion for foreign investment in Bulgaria ....................................... 227
I. Duty-free zones .............................................................................................. 227
II. Internal convertibility of the Bulgarian currency ........................................ 235
III. Currency regime ......................................................................................... 236
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Contents vii
IV. Opportunity for foreign persons to open commercial representative
offices in Bulgaria ........................................................................................ 238
V. Opportunity for hiring the staff necessary for economic activity of
foreign persons in Bulgaria .......................................................................... 240
VI. Opportunity for foreign persons to participate in privatisation
in Bulgaria ................................................................................................... 243
Conclusion ............................................................................................................. 244
I. Specific conclusions ....................................................................................... 244
II. General conclusions ..................................................................................... 247
NOTES ........................................................................•.•................. 251
ECONOMIC ACTIVITY OF FOREIGN PERSONS AND FOREIGN
INVESTMENTS PROTECTION ACT .......................................... 255
INDEX ...... ...... ...... ...... ..... ...... .... .... .... ............. .... ...... ...... .... ....... ..... 263
Nikolay Natov - 978-90-04-48182-4
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Nikolay Natov - 978-90-04-48182-4
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PREFACE
The idea of writing this book dates back to 1992. But even before that, from the very
beginning of the reforms in Bulgaria, my attention was drawn by the legal regulation
of foreign investments in new Bulgarian legislation and in the agreements for mutual
promotion and protection of investments, constantly increasing in number. As a direct
observer of the difficult processes and a participant in the complex transition that
Bulgaria has been undergoing in recent years, I am convinced that large foreign
investments are one of the most important economic levers for speeding up the process
of getting out of the crisis. However, inactivity and waiting will not bring about an
increase in the inflow of investments. Constant work is necessary to create a favourable
investment climate in Bulgaria. For this we need political stability and consent in
order to complete successfully the process of transformation of our economy from a
centralised and planned one into a market economy.
Both legal regulation and practice and theory in the field of foreign investment are
something new for Bulgaria. The theoretical analysis of their problems would have
been impossible without getting acquainted with the works of leading foreign authors
in this field, the studies of specialised international organisations, and the legislation
and practice in other states. I had the pleasure of access to a considerable part of these
sources and of extracting the relevant information from them. Opportunities for this
were provided by the kind assistance and support of a number of colleagues, both
lecturers in renowned European universities and practising lawyers.
I would like to express my profound gratitude to: Prof. Dr. Ted M. De Boer, Dean of
the Faculty of Law at the University of Amsterdam, Holland, and to colleagues of the
same Faculty M. Nelissen and]. ]onkman; Prof. Dr. K.-H. Bockstiegel, Director of the
Institute of Air and Space Law and Head of the Chair of International Commercial
Law of the University of Cologne , Germany, and to colleagues from the same Institute
Dr. P.-M. Kramer and Dr. K. Focke; Prof. Dr. Alegria Borras, Holder of the Chair of
International Law and International Relations at the Faculty of Law of the University
of Barcelona, Spain, and to colleagues from the same Chair Dr. J. Forner, Dr. F. de la
Matta, Prof. R. Vinas and Dr. J. Bonet-Perrez. If I have omitted anyone it is
unintentional and my gratitude extends to them too. In addition I would like to thank
the company CIELA, Sofia, and its president, my colleague Dr. 1. Todorov, for organising
the translation of this book into English in good time.
ix
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x Foreign Investments in BU/I-:aria
I hope this book will be useful for foreign investors, both those who have already
invested in Bulgaria and those who would like to do so in the future. Furthermore, the
book can be used by lawyers, students of law and all others who are interested in the
problems of foreign investment in the Republic of Bulgaria.
Nikolay Natov
Amsterdam, Barcelona,
Cologne, Sofia
February 1997
Nikolay Natov - 978-90-04-48182-4
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