"Civil reglementation of divestment in favour of the state ofproperty, aquired from criminal activity in Republic of

Bulgaria"

I. IntroductionThe subject of this report is the adopted in Bulgaria

pattern of fight against illegal enrichment as a result ofcriminal activity. The report follows the logical by outliningthe issue which is part of society’s agenda, includingglobally, issue which is related with great outcome of criminalactivity and its involvement in legal economy. The takenapproaches are also outlined as well as the issues (criminaland civil) which indicate the two fundamental manners offighting this phenomenon.

A general analysis is to be done of the taken approach byoutlining the legal framework within which it operates as wellas the advantages of the chosen citizen model. Support wasseeked for the expressed views within the relevant European andinternational instruments. The procedure of forfeiture by thestate of property acquired from criminal activity is analysed.However, it is in the process of adopting a new Law onforfeiture of illegally acquired property, which is to replacethe current Law on forfeiture by the state of property acquiredin result of criminal activity. The report specifies the mainnew features, but since it is not part of our current law, itis only used as a basis for comparison and to outline the modelwhich should be pursued, namely the introduction of full civilforfeiture

II. The issueAccording to the report "Estimating illicit financial

flows resulting from drug trafficking and other transnationalorganised crime" (Evaluation of illegal financial flows comingfrom drug trafficking and other forms of transnationalorganized crime), October 2011, the Office on Drugs and CrimeUnited Nations ( UNODC) on international flow of moneygenerated by drug trafficking and other transnational organizedcrime, in 2009 the world income of organized crime amounted to$ 2.1 trillion whereas the seventh world economy Brazil had aGDP of 2.02 trillion dollars.

According to the most recent calculation the world incomeof organized crime in 2009 amounted to 3.6% of global GDP. Ifwe consider only the proceeds from the typical sectors of

cross-border crime such as drug trafficking, counterfeiting,traffic of people, oil, rare species, timber, fish, artworks,antiques, gold, human organs and light weapons are obtained 1.5% of global GDP. About half of this revenue comes from drugtrafficking. In the researches are not included proceeds ofcriminal activity within states, such as tax fraud, robbery,theft and racketeering. If they are included as well, criminalincomes could amount to more than 5% of global GDP.

Dirty money enhance corruption, finance armed conflictsand terrorist activity in some cases. Furthermore, theydestabilize and prevent legitimate enterprise, foreigninvestment and development, is said in the report.

The seriousness of the problem is also evident in variousinternational instruments that aim to synchronize and integratethe efforts of the international community in combatingorganized crime

The preamble to the Convention on Laundering, Search,Seizure and Confiscation of the Proceeds from Crime statedthat:

" The member States of the Council of Europe and the other Statessignatory hereto,

Considering that the aim of the Council of Europe is to achieve a greaterunity between its members;

Convinced of the need to pursue a common criminal policy aimed at theprotection of society;

Considering that the fight against serious crime, which has become anincreasingly international problem, calls for the use of modern and effectivemethods on an international scale;

Believing that one of these methods consists in depriving criminals of theproceeds from crime;

Considering that for the attainment of this aim a well functioning systemof international co operation also must be established”

In the same vein is the preamble to the United NationsConvention against Corruption

" The States Parties to this Convention,Concerned about the seriousnes of problems and threats posed by

coruption to the stability and security of societies, undermining the institutionsand values of democracy, ethical values and justice and jeopardizingsustainable development and the rule of law,

Concerned also about the links between coruption and other forms ofcrime, in particular organized crime and economic crime, including money-laundering,

Convinced also that a comprehensive and multidisciplinary approach isrequired to prevent and combat coruption efectively,

Convinced that the ilicit acquisition of personal wealth can beparticularly damaging to democratic institutions, national economies and therule of law,

Determined to prevent, detect and deter in a more efective mannerinternational transfers of ilicitly acquired asets and to strengthen internationalco-operation in aset recovery, "

In March 2012 the European Commission presented a Proposalfor a Directive of the European Parliament and of the Councilon the freezing and confiscation of proceeds of crime.

As the main objective of the proposed draft directive isset

“Member States' authorities to confiscate and recover theprofits that criminals make from cross-border serious andorganised crime. It seeks to attack the financial incentivewhich drives crime, to protect the licit economy againstcriminal infiltration and corruption, and to return criminalprofits to public authorities providing services for citizens."

Generated revenue from criminal activity are to bedeprived. The question is how to do this. By the means andmethods of criminal law and within the criminal process or bycivil law means in a separate special procedure..

The problem lies in the fact that the methods of criminallaw are not always effective in order to combat thisphenomenon. In the continental legal system, unlike the commonlaw, criminal liability is personal. The main purpose ofpunishment is to influence the perpetrator by re-educating andreforming him in order not to carry out other crimes, withoutfocusing on the benefits derived from criminal activity. It ismore difficult to establish the transformation of dirty moneyor transfer of assets by the means and methods of criminal lawand process .

However, due to the adopted model of personal reliability,the " seizure " punishment refers only to the property of theperpetrator and through it it is impossible to be achievedconfiscation in cases where the property is transferred to

third parties or is included in the assets of legal entities orostensible owners.

It is therefore necessary to resort to civil legalprocedures, along with, instead of or after the criminalprocedure.

The following non-comprehensively specified internationalinstruments are relevant to the matter:

- Convention on Laundering, Search, Seizure andConfiscation of the Proceeds from Crime (State Gazette. 43 of27 May 1994).

- International Convention for the Suppression of theFinancing of Terrorism (State Gazette. 70 of 19 July 2002).

- United Nations Convention against Corruption- Framework Decision 2001/500/JHA- Framework Decision 2005/2012/PVR- Framework Decision 2003/577/JHA- Framework Decision 2006/783/JHA- Council Decision 2007/845/JHA

Within the domestic Bulgarian legislation, besides thespecial

- Law of divestment in favour of the state of propertyacquired from criminal activity adopted in 2005,

relevant to the matter are the provisions of Article 53 ofthe Criminal Code

Art. 53. (1) Regardless of the criminal responsibility seized in favour of thestate shall be:

a) the chattel belonging to the delinquent and have been used for committing deliberate crime;

b) the chattel belonging to the delinquent and which have been subject todeliberate crime - in the cases explicitly stipulated by the special part of this Code.

(2) (New, SG 28/82) Seized in favour of the state shall also be: a) the chattel, object or means of the crime the possession of which is

prohibited, and b) the acquisition through the crime, if not subject to return or recovery. When

the acquisition is missing or has been expropriated its equal value shall be adjudicated.

Forfeiture in favour of the State as an administrativesanction provided and other laws as grounds for conducting anadministrative offense, and takes the subject of infringement,

eg. Article 20 of the Law on administrative violation andpenalties:

"(1) Apart from imposition of such administrative sanctions as specified underArticle 13 above, the penalising authority shall rule forfeiture in favour of the state ofall personal effects belonging to the offender that have been put to use in thecommission of a deliberateadministrative violation, if the relevant law or ukase provide so.

(2) Forfeited in favour of the state shall also be all effects constituting theobject of theviolation, the ownership whereof is banned, regardless of their quantity, value, orwhereabouts.

(3) Apart from the effects referred to in the above paragraph, in all casesidentified in the relevant law or ukase forfeited in favour of the state shall also beany effects, belonging to the offender, constituting the object of offence."

Art. 20 of the Currency Law "The subject of the offence shall be seized infavour of the state, including

when the offender cannot be identified."In this sense these provisions relate to the text of

Article 53 of the Penal Code, and with it exclude theapplication of the Law of divestment in favour of the state ofproperty acquired from criminal activity/The Law/.

It's important to know that according to Bulgarian law,the forfeiture in favour of the state is not punishment, it isa measure of impact and recovery. The creation of the legalfigure "forfeiture of the state" not as a punishment but as ameasure of recovery is not allowed to violate the principle"non bis in idem".

III. The Bulgarian model

1. Historical notes

The idea of fighting against illegal enrichment, due toillegal activity, has its historical bases after the liberationof Bulgaria when the Law of illegal enrichment of clerks of1894 gave a possibility to deprive civil and municipalemployees' properties with unestablished origin. This law isreplaced by Law of divestment in favour of the state ofproperty acquired from criminal activity of 1946 and the Law of

citizens' property and its chapter III "Divestment in favour ofthe state of unearned incomes obtained from citizens“ of 1973,the last one is canceled by the Law of divestment in favour ofthe state of property acquired from criminal activity of 2005.

2. General characteristic of the law.

The basic idea of the law is intersection of the economicbase of the criminality as one of the main mechanisms foreffectively countering various forms of criminal activity.

Art. 1 of this law determine its application: "This law shall provide the conditions and the order for imposing securing

measures and divestment in favour of the stat of property, acquired directly orindirectly from criminal activity."

By creating this law, as an expression of the idea, thatthe effective fight against serious and organized crime isbased on criminal's deprivation of benefits acquired fromcriminal activity, the law supplements Penal Code's measuresand is applied only for those properties which has not beendivested in favour of the state or confiscated under otherlaws. In this sense this law is subsidiary. However, regardingtransformed properties, related parties and companies, this lawis the main normative act which allows deprivation of criminalproperties.

Art. 2 defines the objectives as "prevention and restriction of thepossibilities for deriving benefits from criminal activity and prevention of thedisposing with property, acquired from criminal activity."

This idea is developed worldwide as far as withconventional solutions of the criminal law could not beachieved effective results. That is because in the last fewdecades the rapid development of public and economic relationsled to formation of many new forms of criminal activityspecified in the Penal Code by creating new criminal groups upto the classic crimes and completely new ones. Classic criminallaw has formed its instrument to influence, if it could be saidlike that, criminal offences against the person and theproperty. Being directed to the criminal by the methods of thecommon and general prevention, this law aims to reeducate andcorrect him and to influence dissuasive other people. By themethods of criminal law, in a much lesser degree, the inclusionof benefits from offences in the economic life could be

prevented, but the measures under Art 55 of the Penal Code andthe punishment "confiscation" don't concern benefitstransferred to third parties or included in the property of acorporate body.

The term "divestment in favour of the state" introduced bythe law is not a punishment and in this case it is a juridicalinstitute different from the punishment "confiscation" in theBulgarian Penal Code. Although it has a penal character thedivestment in favour of the state under the law aims to deprivethe criminal from benefits which he has acquired directly orindirectly from criminal activity. According to this principlethe new law in text of Art 1 enacts that "This law shallprovide the conditions and the order for divestment in favourof the state of property acquired from unestablished source."

According Bulgarian legislation, the prerequisites fordivestment in favour of the stare are:

- enforceable judgement for committed crime, under Art. 3.- property of significant value. According to para 1 (2)

under additional provisions of the law a significant value is avalue 60 000 lv. over (30 000 euros).

- no legal income- relation between criminal activity and acquired

property.

The procedure accepted by Republic of Bulgaria requiresthe person to be accused for initiating the procedure ofestablishing the property but for depriving it the personshould have a judgment in force. The relation between theprocedure of divestment and the criminal procedure and theconviction gives classical and conservative character to theprocedure as opposed to "expanded civil confiscation in whichthe divestment is not related to a judgment in force", to whichsecond model Bulgaria is oriented in the new project of the Lawof illegal established property. The expanded civilconfiscation is related to the criminal activity which shouldnot be established with a judgment in force but only to have acriminal proceeding which doesn't need a conviction.

Under this law in force, a divestment without a judgmentis possible when before the penal procedure has not started orthe started one has been terminated because the acting personhas deceased, or after committing the crime the acting personhas fallen into durable mental disorder excluding sanity or an

amnesty has followed, or after committing the crime the actingperson has fallen into short mental disorder excluding sanityor there is a serious disease that prevents the conduct of theprocedure, the acting person is a person with immunity. (art 3(2) of the law and art 25 of Penal Code). Similar hypothesisprovide also art 5 of European Commission's Project directive.

The other essential moment is the law's object. There areconcerned: a property acquired directly or indirectly fromcriminal activity and any benefit acquired directly orindirectly from criminal activity, as a benefit means a form ofeconomic benefit of a property acquired from criminal activity.The term "property" is not defined in the law but in theConvention of 1990 and Framework decision 2005/212 ofEuropean Union's Council.

"property" includes a property of any kind, substantialand unsubstantial, movable and immovable property, documentsabout or documents which prove right of property or otherproperty rights.

In the same direction is the definition given in art 2(1) of Project directive. The absence of definition in the lawdoesn't put practical problems to its application. Underdivestment are any acquired property rights (property rights,contractual rights, shares of companies, stocks, etc...).

For achievement of the objectives in art. 2, the lawformulate a claim for real divestment under art 4 (1) of thelaw:

" By the order of this law shall be divested property, acquired during thechecked period by persons about whom has been established that the grounds ofart. 3 exist and in the concrete case can be made grounded supposition that theacquired is connected with the criminal activity of the persons as far as lawful sourcehas not been established."

To achieve the second main objective the law hasformulated a claim for divestment of what’s actually receivedfrom a contract for valuable consideration under art 4 (2) ofthe law. By this action the law determine as the subject andthe size of the claim – “the real value”, which is determinedfrom property’s real market value.

The claim under (2) is subsidiary to that under Art 1 –“when the property under (1) is transferred” – for regardingthe claim under (2) it’s necessary to have prerequisites under(1), but this text not to be applicable because of the

property’s absence of divestment in the defendant’s property.The comparing between both of the texts determines the opinionthat the real divestment of properties has its subject underart 4(1), but real divestment of properties has its juridicalsubject under art 4 (2) of the law. By formulating the claimunder art 4 (2) of the law, our law execute the generalprovisions of art 2(2) of the Convention from 1990, Frameworkdecision 201/500 from 26.06.2001 г. and Framework decision2005/212 from 24.02.2005 г., i.e. introduces in our juridicalsystem a mechanism to enable a possibility for divestment ofdefendant’s property of value corresponding to incomes fromcriminal activity. In this sense is the text of art. 2 ofProject Directive. In those acts there is a term "benefit"which is defined as the one in art 2 (1), i.e. "any economicbenefit, acquired from crime; it may consist of any kind ofproperty and includes any subsequent reinvestment or conversionof direct benefits from suspected or accused person and fromany valuable benefits.

The text of art 4 of the law is the one which determinelaw's subject, while the following texts are related toparticular hypothesis of divestment:

- of inheritance " The property acquired from criminal activity shall also be divested from the

heirs or the devisees of the person who has acquired it up to the extent of theacquired by them."(art 5)

The application of this text does not make practicalproblems. There are problems with forming the defendant'sthesis as it's possible to not know the financial sources foracquiring of the properties.

- from corporate bodies"Under the conditions and by the order defined in this law shall be divested in

favour of the state also the property, acquired from criminal activity, which has beenincluded in the property of a corporate body, controlled by the checked personindependently or jointly with other individual or corporate body. The property shallalso be divested in the cases of legal succession of the respective corporate body."(art 6)

By this text the law introduces a possibility to bedeprived properties, included in companies. This allows toeffectively fight against organized crime. The use ofcommercial companies is one of the methods for including ofsources with criminal origin in the legal economic.

- matrimonial community property

" Property, acquired from criminal activity, which is matrimonial communityproperty, shall also be divested in favour of the state when is established the lack ofcontribution of the other spouse for its acquisition." (art 10)

In order to protect state's interests in transactions withproperties acquired from criminal activity, the law hasintroduced a system of rules which must make it possible todeprive a real property subject of the transferee.

The law declares invalid regarding the state any donatedtransactions with property acquired from criminal activity. Itis a form of relative invalidity consequently the propertycould be deprived under art 4 (1) of the law.

Essential for the law's application and for achieving itsobjectives there is a possibility to be real deprived the givenon gainful transaction with third parties. As far as thispossibility threatens the juridical turnover's security, it islimited because of the requirement to be prove that the thirdparties are:

have known the property has been acquired from criminal activity, orhave acquired the property for its concealing or for non disclosure of its unlawful origin or the actual rights connected with

this property. (art 7)This provision is important, as far as from practical

point of view is frequently in case of coming divestment whenthe persons transfer their properties to third parties as inthis way they could avoid the possibility their property to beconfiscated under the Penal Code. This is an importantdifference from the possibilities which gives the criminal law.Under the Penal Code's provisions the punishment "confiscation"is applicable only for the person's own property and there isno mechanism to declare for invalid the transactions by whichthe person has disposed with his properties.

To achieve a real divestment is necessary to declare thetransaction as an invalid one, so the commission should provethe knowledge of certain facts. However, when part of thetransaction is a spouse or a relative, the divestment is fromthem, without a need to declare the transaction as an invalidone to the state. The law supposes the knowledge of thosepersons. This is a rebuttable presumption and the person shouldrebut it, not the state.             The general features of the introduced by thelaw civil procedure of divestment of criminal properties are:

-         Independent approaching is forbidden.

-         Divestment in favour of the state shall begiven only after final judgment.

-         Divestment is based on final decision of CivilCourt.

-         The juridical procedure of divestment isentirely civil and is developed by the rules of Civil ProcedureCode.

-         There is a reversed burden of proof.The defendant proves the sources of funds for divestment of theproperty. 

The reliance of the procedure of divestment from ajudgment in force precludes the characterization of the modelas “civil confiscation”.

The procedure of establishing the acquired property fromcriminal activity is given to specially created administrativestructure named “Commission of establishing a property acquiredfrom criminal activity”.

The focus should be on the fact that in the Commission’spowers is only establishing of property acquired from criminalactivity. The actual divestment in favour of the state isenforced by a judgment given by a civil court. 

3.      Statute and powers of Commission of establishing aproperty acquired from criminal activity.

The Commission is a specialized public body, corporatebody, with a residence in Sofia. The commission shall becollegial body consisting of five members, including chairmanand deputy chairman. The chairman of the commission shall beappointed by the Prime Minister, the deputy chairman and two ofthe members shall be elected by the National Assembly and oneof the members shall be appointed by the President of therepublic.

The Commission's members are with 5 years term and theydon't have the right of two consistent terms. Members of theCommission shall be elected respectively capable Bulgariancitizens who are not convicted of a crime of general character,have a university degree in law or economics and at least 5years of experience. The Commission's president is a personwith a university degree in law.

The powers of Commission are regulated in art 13 (1) ofthe law:

- formation of procedure for establishing of property,acquired from criminal activity'

- submitting to the court of motivated request forimposing securing measures;

- submitting to the court of motivated request fordivesting in favour of the state of property, acquired fromcriminal activity

- appointing of the directors of the territorialdirectorates and upon their proposal determine the

inspectors in them- implementing other authorities, provided in this lawThe Commission meets on the participation of at least

three of five members. In exercising its powers the Commissionapproves Decisions by simple majority of all of the members.The Commission's decisions are not administrative acts and arenot subjects of independent appeal.

In its activity the Commission is supported by anadministration with territorial managers in: Sofia, Vidin,Lovech, Veliko Tarnovo, Russe, Varna, Burgas, Haskovo, Plovdivand Blagoevgrad.

Art 12 (10) of the law supposed that members of Commissionin the procedure of establishing a property acquired fromcriminal activity are the managers and the inspectors in thosedepartments. The inspectors and the managers of the territorialdepartments shall be persons with a university degree in law oreconomics.

The assignment of this specific feature of speciallydesigned structure is an appropriate decision. This is the wayof contributing to the specialization of theestablished authorities and do not allow dilution ofresponsibility. In the initial discussion of the law, theproject is the establishment of a specialized unit within thetax administration.

Along with this mechanism of structuring the Commission(through representatives emanating by the legislative,executive power and the President) guarantees objectivity andprotects the Commission of political intervention. It should benoted that the Commission only notes the fact of the disparitybetween income and property,  it does notestablish divestment, this provides a final decision by a civilcourt.

4. Procedure for establishing of property acquired fromCriminal Activity.The procedure for establishing of property acquired from

criminal activity passes through these stages:1. Formation of a verification of the property status/

financial condition;2. Formation of procedure for establishing of property

acquired from criminal activity;3. Imposing protective measures upon property acquired

from criminal activity;4. Formation of civil case for divestment in favor ofthe state.Verification of establishing of property acquired from

criminal activity begins based of notification from The Policeor The Prosecution for criminal prosecution against particularperson committed an offense. To provide initial information forthe Commission, the law introduce an obligation for the courtsto inform territorial structures of The Commission for alleffective sentences by texts of the Penal Code, covered by thelaw for five years before the law comes into effect.

Crimes that fall under Law of divestment in favour of thestate of property acquired from criminal activity areexhaustively listed in its Article 3 of the Act together withthe relevant provisions of the Penal Code. Criminal groupsincluded in Law of divestment in favour of the state ofproperty acquired from criminal activity can't be prosecutedunder one common criterion. In the Act are included crimes ofwhich the offender can derive economic benefit and crimes ofwhich ones can not. A typical example is a crime, regulated inart. 339, paragraph 1 of the Penal Code:

" A person who by any means whatsoever acquires, holds or gives to anotherexplosives, firearms, chemical, biological or nuclear weapons or ammunition,without due permit therefor, shall be punished by deprivation of liberty for two toeight years".

In this case mining property tax is by definitionimpossible, but it is a prerequisite for initiating aninvestigation of the property status of the offender,respectively, initiating a procedure of divestment of entryinto force of conviction. Of course the law includes suchcrimes that generate revenue.

In the presence of suitable notification according to theLaw the authorities for establishing of property acquired fromcriminal activity (the inspectors in the territorialdirectorates and directors in), start checking for establishingof property acquired from criminal activity. The verificationincludes identification of the range of related individuals andcompanies. This includes the family of the person and thecompanies that this person controls.

According to ph.1, t.4 from the Additional provisions ofLaw of divestment in favour of the state of property acquiredfrom criminal activity " Controlling of corporate body" is theright to appointing or discharge of the majority of the membersof the management or the control body of the corporate body,owning of the majority of the stocks or the shares with rightto vote and management of the activity of the corporate body onthe basis of a contract.

After being given ranges of related individuals andcompanies, an information is collected for their propertystatus. The investigation period covers a period of 25 years,but not earlier than the age of majority of the person. Theperiod of the verification is 10 months and it can be extendedjust once by 3 months. The Jurisprudence held that the periodis instructive and in this context its failure do not ruin theprocedure.

Authorities check the property, the legal basis for itsacquisition and its value; transformation of the property, theincome of the person, paid by it for public duties to thestate; ordinary and extraordinary expenses, tax returns of theinspected person and other circumstances that are important toclarify the origin of property and the way of acquiring it ofthe inspected person, his family members and third parties.(Article 18, paragraph 1). Data access of the bank accounts isunder authorization of the Borough Court .

The lack of explicit definition, is not a problem for theapplication of the law. The concept of a property laid down inthese acts is maximum total and aims to cover the nationalspecificities of the countries. In this sense in Bulgarian lawas property we may understand:

The verification establishes the value of propertyacquired by the person by using the market value, not the pricerecorded in the documents for acquisition.

The information about the property status of the inspectedperson and its related entities, collected from the inspection,is a subjected to economic analysis, which aims to establish adistinction between the incomes and property of the person.

If the verification did not establish that the person hasacquired property of significant value or identify legalsources of income for its acquisition or until the completionof the verification criminal prerequisite check fails, then anact of the inspector as an authority under Article 12 of theAct shall terminate the inspection.

If the verification established that the person hasacquired property of significant value, has started criminalproceedings (the conviction is a prerequisite for initiation ofproceedings to revoke) to commit any crimes of those mentionedin Article 3 of the Law and from the collected informationthere is no information about legal sources of income, therespective territorial director shall submit to the Commisionreasoned report with a proposal to institute proceedings forestablishing of property acquired from criminal activity.

The proposal is considered at a meeting of Commission forEstablishing of Property Acquired from Criminal Activity, whichadopted a resolution to initiate proceedings (Article 13,paragraph 1, item 1 of Law the authorities for establishing ofproperty acquired from criminal activity). The decision is notdelivered to the person and can not be subject of judicialreview. The decision does not create independent legal effectoutside the administrative phase of the verification ofproperty, with it and collected information shall bedetermined subjective and time-scale of production. In theproceedings are used data collected during the investigationand based on analysis of existing and collected after theinitiation of production data aims to establish a distinctionbetween income and property of the person. The production aimsto identify the acquired assets from the person, and which ofthem were no legal income. For legal at this stage accept suchdocumentary found on the obtained data by public authoritiesand banks. Analysis at this stage aims to establish to which ofthe the assets the person has not disposed with sources offunds to acquire them, and therefore which of them areavailable and which is disposed, and establishing thecircumstances surrounding the transactions of disposition ofview discretion to implement the provisions of Articles 7, 8 or9 of the Act.

The law is not regulated to a period which should becompleted proceedings under Article 13, paragraph 1, item 1 ofLaw of divestment in favour of the state of property acquiredfrom criminal activity and switched to proceedings in respectof interim measures (Article 13, paragraph 1, item 2). However,there is no barrier, with the decision to initiate proceedingsfor establishing of property acquired from criminal activity(Article 13, paragraph 1, item 1) to decide on interim measures(Article 13, paragraph 1 § 2).

According to Bulgarian law, interim measures are: - distraint of movable property, vehicles, claims by thirdparties including banks

- foreclosure over real estates or- other appropriate measures. The last opportunity allows

flexibility in the choice of measure, which corresponds to theneeds of the applicant.

Based on a reasoned proposal by the Director of theterritorial directorate, Commission for Establishing ofProperty Acquired from Criminal Activity takes the decisionunder Article 13, paragraph 1, T2. by Law of divestment infavour of the state of property acquired from criminalactivity. Based on the decision the Commission submit a writof summons for granting interim measures. Competent to examinethe request the District court's permanent address of theperson or locations of the property. The writ of summons mustbe accompanied by convincing evidence on the possible merits ofa future claim. It listed the assets on which will be requestedprecautionary measures and the value of the future action,which will eventually be brought.

This measure is measure for a future request and it aimsto keeps the legal status of assets, such as that at the timeof enforcement and / or foreclosure.

The court should give an answer in the same day by aruling which granted or refused to admit all or part of therequested interim relief. The Act of the court subject to threeinstantsionen judicial review, which is another guarantee forthe protection of citizens' rights and lack of administrativearbitrariness.

A basic moment which must be emphasized is that theCommission did not take precautionary measures, it only wantsthe court to be allowed, in other words - the procedure forinterim measures is entirely legal.

Because it is a guarantee of a future action, the courtset a deadline within which such action shall be brought andobliged the Commission to provide evidence of its filing. Ifclaim is not presented within the deadline or do not provideevidence, the court admitted officially repealed securitymeasures. According to Civil procedure code, art.390, the timelimit for submission of future claim can not be longer than onemonth and it runs from time of notification to the applicant.

The provision of CPC puts certain problems where therespondent of the future action will not an effective sentencebecause it is a prerequisite for filing a claim for forfeiture.The current conflict was resolved with an interpretativedecision №1 of 2009 of the General Meeting Civil andCommercial Division of the Supreme Court, which accepted thatin these cases month period for filing of a future claim runsfrom the entry into force of conviction.

Based on its ruling, the court issues a protective order,which admitted to foreclosure is carried out by the judgeentries and in the case of liens by the bailiff.

The purpose of interim measures is to preserve the assetsinto legal status at the time of their imposition. After themeasures are imposed the owner shall be deprive of theregulatory authorities to the asset as any act of dispositionshall be void against the state. And in Article 217, par. 3 andpar. 4 of the Penal Code disposition of seized property isdeclared a crime.

After the imposition of protective measures the Lawprovides the person and related individuals and corporatebodies to be served Declaration on Article 17, paragraph 5 ofthe Act. With this declaration the person has the opportunityto declare all his assets (property, vehicles, stocks, shares,antiques, securities, bank accounts, etc..) and the value ofwhich are acquired, to declare all transactions that committedthese assets and sources of funds for their acquisition.

The importance of this declaration is reflected in the lawintroduced by the presumption that if the person does notaccept the declaration or submit it on time or submit it but isincomplete, then the undeclared assets are rebuttable presumedto have acquired from criminal activity. The deadline forreturning the completed declaration is 14 days without thepossibility of extension.

This declaration is the first participation of the personin the administrative procedure. Through it, the person can

express its views on relevant facts. May indicate unidentifiedsources of funds for example loans from private individuals,profits from lotteries, work abroad, etc. To the declarationthe person may submit evidence to substantiate allegationsbowed.

Along with the declaration the authorities of theCommission may require explanations from those of factsrelevant to the proceedings.

If the data collected in this phase shows evidences forlegal sources of funds for acquisition of assets, theCommission can makes a decision for waiver of imposed security.Based on this decision in the respective District court shallbe applied for cancellation of imposed security.

If within this phase does not establish reasons fortermination of the proceedings within the period set by thecourt to assert future claim, the Commission should decide fortabling a reasoned request for withdrawal. Under Article 28 ofthe Act, The reasoned request in the nature of writ of summonsmust correspond the requirements of procedural common law.

The claim is submitted to the District court's permanentaddress of the defendant, and if they claim to withdraw realestate to one District court in whose district is the highesttax assessment of the property. District court must publish inthe Official Gazette a message that contains: number of the acase for the received request data, inventory of property, anindication of the period within which interested persons mayfile their claims on the property and the date for which is setthe first meeting which can not be earlier than three monthsfrom the publication of the notice. (28, Paragraph 2).

The meaning of the announcement is to make the processpublic and enable people who claim rights to specified assetsto notify them in the process. They have the opportunity tointervene in the process. There is a debate for the rights ofthird persons, if they do not apply them in the process ofwithdrawal. In essence this is about property rights or limitedreal rights on the subject of withdrawal. In this case, with aneffective desicion of withdrawal, there will be a conflictbetween the rights of the state and those of third parties.Currently, there's no jurisprudence on this issue and literalinterpretation of the law based on the provision of Article 29of Law:

"The third persons who claim independent rights in the property can intervenein the case presenting the respective claim to the first instance."

This text gives ground to believe that if third partiesfail to enter into the process their property and assets beconfiscated to the state, they can defend their rights withparticular claim. There are practical problems in concerningthe legitimate passive entity to comply with the claim - TheCommission or the Government represented by the Minister ofFinance or the Minister of Regional Development and dependingwhether it refers to a property. There is a problem if theproperty or the asset after its withdrawal was subject topublic sale by the National Revenue Agency. According to Tax -Insurance Procedure Code:

Art. 239. (1) "The sold through the public sale movable properties and rightsover them,assessable in money, shall become in ownership of the buyer even theyhave not been in ownership ofthe debtor."

As for real estate for them art. 239, paragraph 2 of Tax -Insurance Procedure Code provides that,

" The buyer shall become an owner of the sold real estate even if the debtorhas not been anowner, if till the expiration of one year after the promulgation in the"State Gazette" of the decree forassignment has not been lodged a claim forownership."

Plaintiff to thе withdraw case in the country isspecialized state body - The Commission, which is representedby the Chairman or by an authorized officer with legaltraining.

As defendants in the proceedings shall be constituted thechecked person itself and persons under Art. 5-10.

The Court sits in open court. In proceedings necessarilyinvolved a prosecutor. (Article 30, paragraph 1).

As has been pointed prerequisite for initiation ofproceedings for withdrawal is an effective sentence for anoffense indicated in Article 3, paragraph 1 of the Act. Theimportance of criminal activity as a reason for withdrawalunder the law is pushed through the possibility forestablishing criminal activity as a fact under the CPC, if forthe reasons listed in Article 3, paragraph 2 of the Act,criminal proceedings is not started or even started isterminated. In this case the Commission should prove theoffence which has the nature of determinate relationship andwithout it the withdrawal of proceedings is not possible.Practically, proceedings are developing in parallel and with

its judicial act, the court shall rule on the question whetheran offense has been committed.

Procedure shall be conducted under the rules of generalcivil litigation, special law does not introduce deviationsfrom the general rules regarding the procedure.

The court should make a decision by which ruled wholly orpartly withdrawal in favor of the state or reject all or partof the Commission's claim. The decision of the District courtmay be appealed by the general order to the appropriateAppellate court and Appellate court's decision may be appealedto the Supreme Court.

The decision enters into force with the general rules ofart. 296 of the Civil Procedure Code. Depending on therequested claim the decision may have a double effect.Concerning the claim for real withdrawal the decision isconstitutive. With the entry into force, the asset passes intoownership of the state and for the claim for an award of fundsthe decision is reprehensible. Based on the final decision,first instance court issues a writ for the seized and adjudgedto the state, which is sent for implementation to theauthorities of the National Revenue Agency.

Decision shall be enforced by National Revenue Agency,according to Art. 162 of Tax-Insurance Procedure Code.

For the awarded costs in favour of the Commission and thelegal adviser's reward there is a separate writ of execution.This claim is private and it is collected by the order of CivilProcedure Code.

By this procedure for divestment in favor of the stateends.

Of course it's possible the claim of the state to bewholly or partly rejected. In this case, the court along withthe rejection, provides lifting of protective measures.

3. Issues with the use of the lawSo the outlined civil procedure of divestment in favor of

property acquired from criminal activity poses some problems ofpractical and theoretical nature.

First, the practice raised the question of the connectionbetween criminal activity and acquired property. This issue wasdiscussed in the beggining of the report.

The second problem is the linkage of the claim forwithdrawal with the effective sentence. The requirement of thelaw for having an effective sentence suggests waiting criminal

proceedings to end. Това създава опасност, активите на бъдещияответник да бъдат под запор един неопределени продължителенпериод, без яснота дали ще се стигне до предявяване на иск заотнемане. This creates a risk the assets of the prospectivedefendant to be in an attachment for a long period withoutclearness whether there would be a claim for the divestment.This restriction on the ownership can come into conflict withthe Convention for the Protection of Human Rights andFundamental Freedoms. In Article 1 of the First AdditionalProtocol there is an opportunity:

"in any way impair the right of a State to enforce such laws as it deemsnecessary to control the use of property in accordance with the general interest or tosecure the payment of taxes or other contributions or penalties."

It is envisaged that” No one shall be deprived of his possessions except in the public interest and

subject to the conditions provided for by law and by the general principles ofinternational law.

It is not questionable that the purpose of the law is toprotect the general interest of citizens and helping tostabilizied the international community, by seizing theproceeds of criminal activity, but on the other handrestrictions without time limit and without clearness whetherthis is justified by the dependence of the case for withdrawalthe pronouncement of the criminal court, put certain questionsto the application of the chosen of the country mechanism.

This problem is associated with the selected model fromthe country to combat criminal assets. New law, whichParliament adopted does not require such a connection, andallows a prosecution for withdrawal without a final judgmentbut only in the charge that characterizes the new procedure asan "extended civil forfeiture."

The third problem is related to the management of seizedand forfeited property. As has been pointed, seizing assetsremain in the possession of the person and their owner isdeprived only of the right to dispose of them. However, aftertheir withdrawal, they apply the general procedure for thesale, which opens them again to be acquired by criminalorganizations. Using the experience of other countries, likeItaly in the management of the divested assets, new law solvesthis problem by providing a specific structure that will dealwith the management of property seized and taken away.

The application of the law meets other issues ofprocedural and substantive nature, such as its operation at the

time, using of judgments handed down before March 2000, usingthe criterion as a measure of values regard to denomination ofthe lev introduced in Bulgaria in July 1999 .

IV. Conclusion. With the Law, Bulgaria introduced a model to counter

organized crime based on the Irish experience, and thus obtaina symbiosis system between common law and a country with acontinental legal system. The time has shown strong and weakpointst hat led to the creation of a new law, which is based onexperience and try to overcome disappointments and develop thebest practices. In the same time it changes the conceptualmodel and put into practice the "extended civil forfeiture"without penalty.

Considering the results of application of the law we shallremember that it creates an entirely new structure, of whichorganization and ensurance is needed both material and stafftime. It takes time to be moved the whole procedure as in itsadministrative phase and within the court phase.

For the previous 2011 the Commission requested interimrelief in the amount of 84,935,661 lev (€ 43,426,913), thecourt has made a charge over the assets of 83,125,678 lev (€42,501,484) of which properties are worth 72,990,696 lev (€37,319,550) and refused for the assets worth 1,809,983 lev (€925,429)

In 2011 The Commission has brought 72 cases to withdraw ofa total value of claims 35,424,750 lev (€ 18,112,387).

For the same year the value of actual property seized witheffective solution is for the amount of 9,355,364 lev (€4,783,321).