When considering the property legislation framework, it is necessary to start by examining the past and present constitutional norms regulating the carrying out of economic activity in Bulgaria.

The first Bulgarian constitution - the Turnovo Constitution, was adopted in 1879. It proclaimed the country a constitutional monarchy with popular representation and introduced a number of democratic principles for the creation and development of parliamentary institutions in the country. Most significant to the development of market relations was no doubt the principle of the inviolability of private property upheld by the Constitution (Art. 67 "Property rights shall be inviolable").

Following the 1944 socialist revolution, the supreme law of the country became the first socialist Constitution of 1947. It provided the basis for turning Bulgaria into a country with one-party government - that of the Communist Party, and a centralized planned economy. Public property was accorded a central place and significance, with guarantees for its protection and development, while private property was relegated to the background and subject to considerable restrictions. The subsequently adopted laws limited private property to "personal property", which term covered real estate for personal use - i.e. housing and country houses at the most, as well as personal effects - objects of daily personal use, small-scale farm equipment, and private automobiles. The nationalization of industrial enterprises, mines and quarries carried out in 1947, and the subsequent collectivization of farm land in the 1950s, finalized the transition to a centrally planned economy, regulated by administrative acts.

The second socialist Constitution adopted in 1971 - the so-called "constitution of mature socialism" - conclusively established the leading role of the Communist Party in society and the state, i.e. the dictatorship of the proletariat. Bulgaria's economic system was defined as a socialist one, excluding the exploitation of man by man. The state controlled the national economy on the basis of unified five-year plans for social and economic development.

The forms of property were defined as state-owned (public), cooperative, property of public organizations, and personal property. Art. 15 of the Constitution defined public property as the highest form of socialist property, enjoying special protection. It covered industrial plants and factories, banks, mineral resources, natural energy sources, nuclear energy, waters, forests, pastures, roads, railway, water and air transport, posts, telegraphs, telephones, radio and television. The state exercised its property rights by creating economic organizations or state-cooperative enterprises which were to run, maintain and administer the property. Art. 29 of the Constitution included a provision whereby the state could establish by law exclusive right to engage in certain types of business activity, and the second paragraph stipulated that foreign trade was an exclusive right of the state.

The provision in Art. 19 of the Constitution defined cooperative property as owned by collectives of workers united voluntarily for the purpose of carrying out joint business activity. The cooperatives could only own means of production in certain cases provided by law. There was more detailed provision for cooperatives in the Cooperatives Act, defining them as socioeconomic socialist organizations, and intrinsic part of the country's socialist economic organization. The fact that it was the Council of Ministers that exercised general supervision over their activity confirms the conclusion that cooperatives were not in a position to compensate for the absence of a private sector in Bulgaria and in fact constituted a disguised form of state-owned enterprises.

According to Art. 21 of the Constitution, citizens were entitled to personal ownership of real estate and personal effects to meet their own needs as well as the needs of their families. This category of personal property was also extended to cover the small-scale means of production and the agricultural output of cooperative member households and others cultivating land that had been granted for their personal use or other supporting activities. In fact, the private sector consisted in supply of services and retail by private persons on a contractual basis, or craft practice - supplying services or production of small wares for mass consumption or folk art and handicraft articles. In those cases citizens could be granted the use of workshops or small retail shops or outlets (public food-and-drink establishments, stalls, kiosks, etc.). This more or less exhausted the allowed business activities by persons other than the state-owned enterprises and cooperatives.

The now acting Constitution was adopted in 1991 and is the fundamental law for the development of a democratic society and market economy in the country. It provides the necessary legal protection and safeguards for private property and the economic rights of citizens.

Art. 17, Paragraph 3 of the Constitution asserts the principle of the inviolability of private property. The forcible expropriation of property can only be carried out on account of state and municipal needs and solely on the basis of an act of parliament provided those needs cannot be met by any other means and subject to equivalent preliminary compensation.

Another particularly important provision is that of art. 19, proclaiming free economic initiative as the fundament of the economy in Bulgaria. The principle has been established for investments and economic activities of foreign and Bulgarian citizens and legal persons to be granted protection by the law. The constitutional norms further guarantee equal legal conditions for economic activity to all citizens and legal persons, and provides for protection of consumers. The abuse of monopoly positions and unfair competition are prohibited by law.

The legal regulation of property rights issues is central to every economic system. After the Liberation those matters were provided for in Bulgaria by the Property Act. The approach of other European countries, where a single civil code regulates both property and contractual relations, was not adopted in Bulgaria.

As mentioned above, the first socialist constitution upheld the dominant role of public property. The Property Act passed in 1951, while adhering to the fundamental civil and legal principles regulating property relations, also introduced a number of principles of a socialist character, which emphasized public property and placed personal property in a subordinate position. Public property included all trade and industrial enterprises and the mineral resources, and its administration was in fact carried out by the Council of Ministers by government decrees and regulations. And since, according to the Constitution, that type of property was not tradeable, it was not subject to the provisions of the Property Act.

The other types of property were the cooperative and personal property. According to the regulations contained in the Cooperatives Act and the standard statutes of the Collective Farms, cooperative property consisted largely of farm land and other real estate or movable property deposited as a contribution to share capital by the individual cooperative members.

Personal property was reduced to the right of each household to own one flat/house and one country house. Individual property rights and transactions involving them were regulated by the Property Act. The Citizen Property Act adopted in 1971 included additional measures of an administrative character meant to introduce further restrictions on the right of citizens to own real estate property under the proclaimed, seemingly "noble" intention of providing possibilities to meet the housing needs of all citizens. Thus, the Citizen Property Act represented a special law, and the property related norms set by the supreme law were in fact derogated.

All of these regulations substituted the freedom of contracting among legal entities for administrative measures, including even the possibility to determine the actual buyer and the selling price. In practice, there existed no genuine real estate market in the country, which meant that one of the crucial preconditions for private sector development was actually missing.

Since 1990 the legal regulation of property relations in Bulgaria has undergone rapid transformation. The hierarchy established by the socialist legislation and the subordinate position of cooperative and personal property with respect to public property was abolished with the adoption of the new Constitution. As stressed above, the constitutional provisions give equal and full protection to all types of property. The Property Act has been amended and all rudimentary socialist norms have been repealed. With the repeal of Chapter II of the Property Act the restrictions on the ownership of real estate by citizens have been lifted. This created the necessary legal framework for the regulation of property rights and provided the essential conditions for the development of a real estate market.

A critical factor for the transition to market economy and private sector development in Bulgaria is the withdrawal of state ownership over the enterprises. It is made possible by the mechanisms of restitution on the one hand, and through the process of privatization, on the other.

The setting up of joint ventures between state-owned and private enterprises first became possible with the adoption of Decree N 56 on Economic Activity and the amendments to the 1971 Constitution which were passed in 1990. That was actually the first step in the gradual denationalization of property.

Presently the setting up of joint ventures is subject to the provisions of the Law on Commerce. However, since the state-owned enterprises are not free to dispose of their property, and the Council of Ministers exercises the rights of sole proprietor of state capital, the creation of joint ventures is also subject to the Rules and Regulations on the Manner and Procedure of Exercising State Property Rights in the Enterprises (passed in 1994 by Decree N 7 of the Council of Ministers). To a certain extent this tends to delay the process, as it is not only the state-owned enterprises, but likewise the respective state authorities - ministries and institutions - which are involved in the setting up of joint ventures with private investors.

On the other hand, with the adoption of the Law on Local Self-Government and Local Administration, the municipalities have been allowed the opportunity to dispose freely of the municipal property. Municipalities are free to form partnerships with other commercial entities and to participate in the carrying out of economic activity through municipal enterprises. In practice, this has actually placed municipal property in the market, which also played a favorable role for private sector development.

The legislation related to the restitution of property proved to be of great importance to private sector development.

In this respect, the foremost act in terms of the implications for the entire economy has been the restoration of property rights in farm land. In the time of socialism, this land, which used to be privately owned until 1950 and in the subsequent collectivization came to be part of the property of the Collective Farms, had been subject to regulations which completely destroyed private initiative and entrepreneurship. Ultimately that also brought about the ruin of agriculture in this country. With the adoption of the Law on the Ownership and Use of Farm Land, the property rights of the former owners and their heirs were restored, thus allowing them the opportunity for independent initiative concerning the use and cultivation of their land.

The Law on the Restoration of Property Rights in Nationalized Real Property was the second most significant restitution law. It is the chief law on the restitution of real property within the zoning map boundaries of built-up areas and of the nationalized private industrial, mining, and other enterprises.

The Law on Restoration of Property Rights in certain Shops, Workshops and Storehouses was the first restitution law. It encompassed relatively small-scale objects, but returning them to their owners has played an important role in encouraging private initiative and above all, for the development of the retail trade. It allowed the expansion of the retail outlet network, the setting up of the first offices of the newly created private companies, and the initial private accumulation of real estate capital.

The Law on Restoration in Property Rights in Some Expropriated Real Property under the Law on Territorial and Town Zoning, the Law on Planned Development of Built-Up Areas, the Law on Town Development, the State Property Act and the Property Act, was aimed at restoring the property rights of owners of expropriated real property.

The adoption in 1992 of the Law on the Transformation and Privatization of State-Owned and Municipal Enterprises (State Gazette 38/05.08.92) created the possibility for rapid denationalization and transfer of property to a wide circle of owners. It will limit state participation in the economy and lead to the emergence of a large number of independent commercial entities in a position to establish competition as a fundamental principle in the transition to market economy.

Industrial and intellectual property rights

In the context of socialist economy the industrial and intellectual property rights were of limited importance. The legal framework was outlined by the 1968 Law on Inventions and Innovations, which only reinforced the socialist principles and was exclusively oriented towards serving the interests of the state. Protection was given to the inventions, whose authors were granted the so-called "authorship certificates" and a minimal remuneration determined on the basis of the "economic effect" of the invention. The inadequate protection of intellectual property rights and the perfunctory financial reward inhibited creative initiative, all the more that there existed a number of restrictions on how the authors could dispose of their inventions, which were considered state property. With the adoption of the Patent Law in 1994, patents were given adequate protection and this type of property was subject to up-to-date legal regulation.

Trade marks and industrial model designs are provided for by the Law on Trade Marks and Industrial Models of 1967, which is regarded as rather important, as it also provides for the geographic names of origin - an element of unquestionable significance to a number of agricultural products and above all Bulgarian wines, which make up a considerable share of the country's exports.

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