site.btaUPDATED Socialist Party Alone Supports Deputy PM Ninova's Proposal for Declaration of Force Majeure

All groups in the Bulgarian Parliament except the Bulgarian Socialist Party (BSP) objected in varying degrees to Wednesday's proposal by Deputy Prime Minister and Economy and Industry Minister Kornelia Ninova that force majeure be declared for all sectors, effective retroactively from February 24 to March 31, in the context of the war in Ukraine. Ninova, who is also the Socialist Party leader, argued that this would allow companies to extend deadlines and be released from liability for damages for non-performance of contracts.

Ninova announced the proposal to the parliamentary Economic Policy and Innovation Committee after meeting with the Bulgarian Construction Chamber. She said the proposal would be put to the vote at the next cabinet meeting.

On Thursday, the opposition GERB-UDF parliamentary group asked that Prime Minister Kiril Petkov explain in Parliament what the government will be doing about the force majeure proposal.

Following GERB-UDF's request for a hearing of Prime Minister Kiril Petkov, Parliament Chairman Nikola Minchev said he would give it careful consideration. The MPs took a break after an argument flared up between GERB and BSP over the opposition's request for a hearing of Petkov.

Meanwhile, the cabinet did not meet as scheduled on Thursday for unspecified reasons.

The Commerce Act defines force majeure as "an unforeseen or unavoidable event of an extraordinary nature which has occurred after the conclusion of a contract." Force majeure exempts either or both contracting parties from liability for non-performing a contractual obligation when this performance is prevented by an extraordinary event or circumstance beyond the control of the parties, such as a war, strike, riot, crime, epidemic or sudden legal changes.

Answering a question from an MP on Wednesday, Ninova said she was not aware if other EU Member States had declared force majeure, but the issue had been raised in different formats in Brussels.

The proposed declaration of force majeure for all sectors is not supported by the majority of parties in the National Assembly, a media survey conducted in the corridors of Parliament found on Thursday.

The opposition's reaction

GERB-UDF

Floor leader Desislava Atanasova told a briefing at the National Assembly that Kiril Petkov should explain why Kornelia Ninova was usurping his functions as prime minister and was dictating the agenda not only of society but of Parliament as well. "I expect the Parliament Chairman to finally realize his functions enshrined in the Constitution and Parliament's Rules of Procedure and invite Petkov to answer the questions," said Atanasova, who was joined by the whole parliamentary group.

Tomislav Donchev: Today Prime Minister Petkov missed the chance to explain to Parliament what this is all about because just the news of [a possible] declaration of force majeure is damaging to the country's economy.

Alexander Nenkov: Declaring force majeure would turn inside out the country's economy. 

Alexander Ivanov: The legal system will be brought to the verge of collapse if the proposal is adopted.  

Desislava Trifonova, former executive director of the InvestBulgaria Agency: A decision to declare force majeure would send a very bad signal to the international markets and would act as a deterrent to investors.

Radomir Cholakov: Declaring force majeure would put an end to the legal system, meaning that the State, municipalities and businesses would stop functioning.

Kostadin Angelov, health minister of the last GERB government: Many directors of healthcare establishments are worried that a company might fail to deliver oxygen, which would put patients' lives at risk. 

Movement for Rights and Freedoms (MRF) 

The MRF asked for a hearing of Ninova, deputy floor leader Yordan Tsonev told reporters. "We don't know what the term force majeure involves, lawyers could not clarify it because there is no legal definition of those circumstances in Bulgarian legislation," he said. The MRF will back any initiative that would help out businesses and individuals amid rising prices, inflationary pressure and other crises, Tsonev said. He added that his group needed a clarification of the implications for all parties concerned before it could spell out its position on a possible declaration of force majeure. 

Vazrazhdane

The smallest group in Parliament does not consider declaring force majeure a good option for the economy or a politically justified decision, leader Kostadin Kostadinov told reporters. He called Ninova's proposal "desperate" and urged the government "to face the responsibility for its actions, as it knew what would happen when it imposed sanctions". He also suggested that the government could seek a solution in the state reserve. Kostadinov said his party met with Bulgarian steel producers who warned that a shortage of imported manganese, chromium and nickel meant they might have to suspend operation in a matter of days. He suggested that resuming local manganese mining could help the steel industry.

The government coalition

Continue the Change

Alexander Rakshiev said a decision to declare force majeure would not be the best option. On the one hand, it might be good for businesses to be exempted from liability for non-performance of contracts, but the risks for the other contracting party should also be considered. 

BSP

The MPs of BSP were the only ones to defend their leader. Prof. Georgi Mihaylov joked that a commission on semantics could be set up to explain the term "force majeure". "Could anyone say that things are quite normal after a two-year pandemic and a war in Ukraine? If this is not force majeure, then what is?" he asked.

MPs of BSP for Bulgaria asked for a hearing of Kornelia Ninova at the next regular meeting of the Economic Policy and Innovation Committee on March 23. The employer organizations will be invited to it.

There Is Such a People 

Floor leader Toshko Yordanov commented that, as with any proposal, the decision rests with the Council of Ministers.

Democratic Bulgaria 

Leader Hristo Ivanov told reporters that his group opposed the proposal for declaring force majeure on the grounds that it would be too radical a move at a time when the Finance Ministry was working on measures to address the companies' financial difficulties. Democratic Bulgaria is in favour of less stressful instruments, while radical measures would further fuel the tension. Ivanov added that Ninova's idea had not been discussed with Democratic Bulgaria.

Business hails the proposal

The Bulgarian Chamber of Commerce and Industry (BCCI) praised what it termed "the government's prompt reaction" to a letter of March 8, asking that the Council of Ministers, the Economy Ministry or the Foreign Ministry issue an act recognizing the war in Ukraine as a classic case of force majeure.

BCCI advised all companies to inform promptly their partners about a delay or non-performance of contractual obligations due to the war in Ukraine and the ensuing restrictions.