BANK ARBITRATION AWAITS ITS LAW
A specialized body for settlement of arguments between banks and their clients will start operation by the end of 2006. For the time being cases between credit institutions and depositors are settled only by Themis's representatives. The establishment of a bank arbitration of its kind is one of Bulgaria's commitments under the Free Movement of Capitals chapter in the pre-accession negotiations with the European Union (EU). However, a special law should be passed by the National Assembly, regulating the structure and competences of that body. Practically, this is one of the few tasks under that negotiations chapter, remaining to be settled by Bulgaria.New regulations on agricultural land will be probably promulgated as well in the months prior this country's accession to the EU. As it is known, the amendments to the Bulgarian Constitution, approved by Parliament in end-February eliminated the ban on the sale of land in this country to foreigners and foreign juristic persons. But the liberalization will enter into effect in 2014, as we have agreed with Brussels a seven-year transition period. Nevertheless, it might be possible for the citizens of other countries to freely buy land in Bulgaria as early as in 2010, when on the proposal of the European Commission the EU's Council of Ministers will reconsider the transition period under the Free Movement of Capitals chapter within the framework of the single European market. Restrictions, however, shall not be valid for the so-called self-employed farmers from another country who get a permission for permanent residence and settle in Bulgaria. In any case, foreigners who do not live permanently in Bulgaria, shall not be allowed to acquire a second house by the year 2012. Interesting regulative amendments will be made as well in compliance with Bulgaria's commitments under the Freedom to provide services chapter.The National Assembly has recently voted that as of April 12 all deposits of individuals and companies in Bulgaria smaller than BGN25,000 will be guaranteed by the Deposit Insurance Fund. This means that if a bank in this country is declared insolvent, the deposits made in it by citizens and commercial companies, shall be repaid to the full amount if they are below BGN25,000. By the end of next year the National Assembly should vote one more increase of the amount of guaranteed deposits. The Bulgarian State has undertaken a commitment to equalize the size of guaranteed deposits with that in the EU, i.e. EUR20,000.A compensation mechanism of this kind was also introduced for the customers of investment companies. The amendments to the Law on Public Offering of Securities voted on second reading stipulate that a special fund for compensation of investors be established. By the early 2010, the minimum ensured investment level should reach EUR20,000. It will be EUR12,000 in 2007 and will grow to EUR15,000 in the following two years.The financial services sector is also impatiently waiting for the adoption of the Insurance Code which draft was approved by the Council of Ministers in the beginning of 2005. Amendments are to be made to the Gambling Act in order to simplify the procedure for licensing EU member state companies to organize gambling activities in Bulgaria.The main question regarding the Free Circulation of Services chapter is whether the EU member states will reach a compromise by 2007 and adopt the new directive in this field known as the Bolkestein directive (named after the former EU single market commissioner). In practice, it will allow companies or self-employed people to offer absolutely free services in another EU member country without asking for special permission which they need today. They only have to meet the requirements of their national legislation. As it is known, some of the biggest EU members, of which France is the most active, oppose the project. However, if the document is adopted by 2007, which is the intention of the team led by the European Commission President Jose Manuel Barroso, Bulgaria may need to request additional transitional periods.