Business Disputes in Bulgaria: Courts, Arbitration, Payment Orders, Limitation Periods and Enforcing an Israeli Judgment

An Israeli company doing business in Bulgaria may find itself in a dispute with a customer, supplier, partner or contractor. This guide explains how the court system is structured, what the fast collection tools are, when arbitration is preferable, how a judgment is enforced between the two countries, and what to do in the first days of a dispute.

1How is the Bulgarian court system structured for commercial cases?

Commercial disputes are heard in the ordinary civil courts under the Code of Civil Procedure, which includes special rules for commercial disputes. The first instance is a district court (районен съд) or a regional court (окръжен съд), depending on the type and amount of the claim. The judgment can be appealed to a court of appeal, and in limited cases to the Supreme Court of Cassation (Върховен касационен съд).

2In what language are court proceedings in Bulgaria conducted?

Under the Code of Civil Procedure, proceedings are conducted in Bulgarian. A document in another language is filed with an accurate Bulgarian translation, and if its accuracy is disputed the court appoints an expert. A party who does not speak Bulgarian is assigned an interpreter at the hearing.

The practical meaning for an Israeli company: contracts, correspondence, invoices and affidavits in Hebrew or English will need translation. It is worth keeping a translated version of the key transaction documents in advance, rather than waiting for proceedings to begin.

3How can a monetary debt be collected without a full lawsuit?

As of November 2026, the main tool is a payment order under the Bulgarian Civil Procedure Code. A creditor files an application with the district court where the debtor is based, the court issues an order without a hearing, and the debtor has two weeks from service to file an objection. If no objection is filed, the order becomes final and enforceable. If one is filed, the creditor must bring an ordinary claim for a declaration of the debt within one month, otherwise the order is cancelled.

• Order under Article 410: for monetary claims up to a ceiling set by law, without the need for a special document.
• Order for immediate enforcement under Article 417: based on certain documents, such as a promissory note, a notarial document or a bank account statement, and allows enforcement to begin even before the objection is decided.
• Enforcement: through private or state bailiffs, who have similar powers.

4Can the European procedures be used to collect a debt?

Usually not, when the claimant is the Israeli company itself. The European Payment Order and the European Small Claims Procedure (up to 5,000 euros) are designed for cross-border disputes within the EU, meaning where at least one party is domiciled or habitually resident in a member state other than that of the court. An Israeli company suing a Bulgarian debtor in Bulgaria in its own name usually does not meet that definition. By contrast, a subsidiary of the Israeli group based in another EU member state can use them.

5What is the limitation period for a contractual claim in Bulgaria?

An agreement that shortens or extends the limitation period is invalid (Article 113). The period is interrupted and starts again when the debtor acknowledges the debt, when a claim is filed or when enforcement begins (Article 116). As a rule, limitation starts to run when the debt becomes due.

6Is mediation mandatory before filing a claim in Bulgaria?

Not in the sense of an obligation to reach an agreement. In 2024 the Bulgarian Constitutional Court struck down a statutory mediation requirement. In June 2025 parliament approved amendments to the Code of Civil Procedure that introduce a compulsory information meeting on mediation in certain types of civil and commercial cases. After the meeting, the parties decide voluntarily whether to mediate.

Even without an obligation, mediation can save time and cost, especially in ongoing business relationships. A mediation centre operates alongside the Court of Arbitration at the Bulgarian Chamber of Commerce and Industry.

7When is arbitration preferable, and what changed in the Arbitration Act?

Arbitration makes it possible to choose the language, arbitrators with commercial experience and a more flexible procedure, and an arbitral award is relatively easy to enforce abroad thanks to the New York Convention. The long-established and recognised local institution is the Court of Arbitration at the Bulgarian Chamber of Commerce and Industry in Sofia.

For an Israeli company, the reform is a factor in choosing the seat of arbitration. One option is arbitration seated outside Bulgaria, at an international institution, and enforcement of the award in Bulgaria under the New York Convention. The decision depends on the amount, the location of the other party's assets and the costs.

8Does Bulgaria enforce foreign arbitral awards?

Yes. Bulgaria acceded to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which has been in force for it since 8 January 1962. Israel has been a party to the Convention since 1959. Bulgaria declared that it applies the Convention to awards made in a contracting state, and to awards from non-contracting states only on the basis of reciprocity. An arbitral award made in Israel therefore meets the terms of the declaration.

9How is an Israeli judgment enforced in Bulgaria?

Yes, through a recognition claim at the Sofia City Court, as of November 2026. Israel is not an EU member, so the Brussels I bis Regulation does not apply, and enforcement takes place under the Bulgarian Private International Law Code. A claim is filed with the Sofia City Court, attaching a certified copy of the judgment and a certificate from the court that gave it confirming that the judgment has become final.

• Jurisdiction: the foreign court had jurisdiction under the rules of Bulgarian law.
• Right to be heard: the defendant received the statement of claim, the parties were duly summoned, and the fundamental principles of the defence were not violated.
• No competing proceedings: there is no final Bulgarian judgment on the same matter, and no proceedings were opened in Bulgaria before the foreign proceedings.
• Public policy: recognition does not conflict with Bulgarian public policy.
• No re-hearing: the court does not examine the merits of the dispute, and the debtor may only argue that the debt was paid in circumstances arising after the judgment.

Article 117 does not list reciprocity among the conditions for recognition. Israeli documents are filed with an apostille and a Bulgarian translation, as both countries are parties to the Apostille Convention.

10How is a Bulgarian judgment enforced in Israel?

A Bulgarian judgment is enforced in Israel only after an Israeli court declares it enforceable, and the application must as a rule be filed within 5 years of the judgment, as of November 2026. Under Israel's Foreign Judgments Enforcement Law, 1958, an Israeli court may declare a foreign judgment enforceable if the foreign court had jurisdiction under the law of its country, the judgment is no longer subject to appeal, its content does not conflict with public policy, and it is enforceable in the country where it was given. The law requires reciprocity, and the application must be filed within five years of the date of the judgment, unless there are special circumstances.

The 2019 Hague Convention on the Recognition and Enforcement of Foreign Judgments has applied in Bulgaria, as part of the EU, since 1 September 2023. Israel signed it on 3 March 2021 but, according to the Hague Conference status table, has not yet ratified it, so it does not currently apply between the two countries.

11What governing law and jurisdiction should the contract specify?

A Bulgarian court decides which law governs a contract under the Rome I Regulation, which applies even when the chosen law is that of a non-EU country. An Israeli governing-law clause in a contract with a Bulgarian party will therefore generally be respected, subject to mandatory rules and public policy. As to jurisdiction, a distinction must be made between choosing a court in an EU member state and choosing an Israeli court, which is examined under Bulgarian national law.

• Draft clear governing-law and jurisdiction clauses, and do not leave the question open.
• Consider what will happen at the enforcement stage: where the other party's assets are located.
• When the other party is Bulgarian and its assets are in Bulgaria, an arbitral award under the New York Convention may be easier to enforce than an Israeli judgment.
• Add a mediation mechanism or time-limited negotiation before proceedings are opened.

12What should you do in the first days of a business dispute in Bulgaria?

1. Gather the contract, orders, invoices, delivery confirmations and correspondence, and prepare a Bulgarian translation of the key documents.
2. Check the governing-law, jurisdiction or arbitration clause in the contract, and any mediation clause.
3. Calculate the limitation deadlines, including the three-year period for damages, interest and penalties.
4. Check the debtor's position in the Commercial Register: assets, charges, insolvency proceedings.
5. Send a formal letter of demand, which also puts the debtor in default.
6. Consider a payment order for an undisputed monetary debt, or an application for interim relief where there is a risk of assets being moved.
7. Consider mediation before full proceedings, and arrange the company's representation with a Bulgarian lawyer.

A broader look at choosing between arbitration and court is in the guide arbitration or court in a dispute abroad, and also what to do when something goes wrong.

This guide provides general information only, and every dispute requires a specific review of the facts and the applicable law.

More on doing business in Bulgaria: Setting up a company in Bulgaria · Corporate tax and transferring profits to Israel from Bulgaria · An Israeli company operating in Bulgaria · Comparison of 8 countries · All guides for companies and businesses

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