On 11 and 21 August 2019 I published two posts on my personal blog in which, through legal reasoning, I showcased how Bulgaria’s government purposefully misinforms the general public about the outcome in a case against Bulgaria before the International Centre for Settlement of Investment Disputes (ICSID) (SGRF v Bulgaria, Case No. ARB/15/43). Some of the few independent media which are left covered the second post in Bulgarian, which attracted public attention. On Friday night, 23 August 2019, Bulgaria’s Ministry of Finance published an unprecedented press release on its website in which it attacked me and my blog (Figure 1). Instead of providing a substantive answer to my legal opinion, Bulgaria’s Ministry of Finance said that my claims were “speculations” crafted by me and my father.

I have never heard of a state institution issuing a special press release about somebody’s academic blog post on a Friday night. As a scholar, I was not impressed by their ad hominem comments whose underlying purpose, it appears, is to attempt to discredit me before society as a whole. My father has not participated in the drafting of my articles: he has his own website where he publishes his criticism against the regime.

I do believe, however, that this press release constitutes harassment and that it is aimed at intimidating me. This serves as further evidence of the lack of rule of law in Bulgaria. In this post I summarize:

• the government’s lies which attracted my attention
• the research I have carried out
• why the government is afraid of the truth
• how harassing critics is a national policy

The government’s statements which attracted my attention

In a nutshell, SGRF v Bulgaria concerns Corporate Commercial Bank which was raided by state institutions in 2014, its license was withdrawn based on reports which were not made public, and nobody was allowed to appeal the decision on license withdrawal in violation of ECHR case law against Bulgaria, namely Capital Bank v Bulgaria. The second largest shareholder in the bank, the State General Reserve Fund Oman (SGRF), which is the sovereign wealth fund of Oman, filed a request for arbitration before ICSID in 2015. They held 30% of the bank’s shares – according to various reports, they sought between 80 million EUR and 120 million EUR in damages.

In April 2019, Bulgaria’s Ministry of Finance broke the news that SGRF withdrew all of its claims with prejudice in December 2018 and the case ended in Bulgaria’s favor. Bulgaria’s central bank went further by arguing that this outcome undoubtedly proved the legality of its actions towards Corporate Commercial Bank. In parallel, at the time, the case was marked as pending on ICSID’s database. Meanwhile, Bulgaria’s counsel Arnold & Porter released a statement that the claimant withdrew all of its claims, but awaited a decision on costs by the arbitral tribunal. You can see screen shots of all these statements in my posts Liar, Liar, Pants on Fire! How Bulgaria Deliberately Misinformed the General Public about the Outcome in ICSID Case No. ARB/15/43 (SGRF v Bulgaria) and An Arbitration Mystery and Bulgaria’s Rule of Law: How Arnold & Porter Gave Away the Existence of a Secret Deal.

On 13 August 2019, ICSID marked the case as “concluded” based on an Award rendered on the same day. A few days later, Bulgaria’s Ministry of Finance paid for articles (they are marked as marketing publications) in which it said that SGRF withdrew all of its claims with prejudice, that the arbitral tribunal dismissed all claims as unfounded, and that all costs would be paid by SGRF. Pro-government media reported that SGRF lost the case and this was a great victory for Bulgaria. Once again, you can see screen shots here: Liar, Liar, Pants on Fire! How Bulgaria Deliberately Misinformed the General Public about the Outcome in ICSID Case No. ARB/15/43 (SGRF v Bulgaria).

I am personally not aware of any court or arbitral tribunal which would rule on the merits if a claim has been withdrawn. I also believe there is a big difference between losing a case and withdrawing a claim. Even in court proceedings, people usually withdraw claims because of settlements or because of financial difficulty. I immediately doubted the latter was the scenario considering the claimant was a sovereign wealth fund. And so I delved into ICSID Arbitration Rules.

What I discovered by studying ICSID’s Arbitration Rules

I read carefully the ICSID Arbitration Rules, which are available on their website, I acquainted myself with Commentaries on the ICSID Convention, and I read articles published in reputable journals, such as the ICSID Review.

Based on this research, I discovered the following:

• Under ICSID rules, one cannot withdraw a claim. One has to submit a request for discontinuance of proceedings.
• Pursuant to Rule 44 of the ICSID Arbitration Rules, a party can submit a unilateral request for discontinuance. In this case, the tribunal issues a Discontinuance Order. This order does not normally contain a decision on costs. The party does not lose any right to litigate again.
• Pursuant to Rule 43(1) of the ICSID Arbitration Rules, both parties can submit a request for discontinuance. In this case, the tribunal issues a Discontinuance Order. This order does not normally contain a decision on costs. The claimant does not lose any right to litigate again.
• Pursuant to Rule 43(2) of the ICSID Arbitration Rules, both parties can ask the tribunal to record their settlement as an Award. They can either settle the costs between themselves or ask the tribunal to rule on costs.
• Most cases of discontinuance are cases of settlements. If parties file requests pursuant to Rule 44 or Rule 43(1), it often means they have agreed to discontinue as part of the settlement.
• Claimants have an interest to insist on Rule 43(2) because their settlement is recorded as an Award and is binding not only on the parties, but on all States, which are Parties to the ICSID Convention. Thus, the settlements are easier to enforce.
• Last but not least, very often ICSID tribunals do not favor the “loser pays all approach”. It is very common to apportion costs even if the claims are upheld.

Just to make sure I was not missing anything, I took a look at ICSID statistics. Figure 2 shows the historic outcomes of ICSID arbitration. There is no “claim withdrawal category.” There are also clear distinctions between the various types of discontinuance and awards.

Finally, I took a close look at the procedural details of the case in question, which are available on ICSID’s website (Figure 3). I noticed peculiar things: there was not an oral phase in the proceeding, which is usually typical, parties started making submissions on costs right after the written phase, there are no orders on discontinuance, etc. Considering the above background and having in mind that the Ministry of Finance so adamantly asserts that SGRF withdrew all of its claims with PREJUDICE, the only logical conclusion is the parties settled pursuant to Rule 43(2) and asked the tribunal to record it as an Award and rule on the costs which had not been settled. I suspect the settlement says that SGRF promises not to litigate again on the same facts.

And so I wrote my articles, which clearly made Bulgaria’s Ministry of Finance panic.

Why the Bulgarian government is afraid of the truth

Bulgaria’s government has many reasons to fear the truth.

Firstly, we have serious reasons to believe that state institutions of an EU member purposefully misinform the general public.

Secondly, as indicated above, this is a gargantuan claim for Bulgarian standards. Surely, the likely settlement involves a substantial payment which is a huge burden for Bulgarian taxpayers. One should not forget Bulgaria is the poorest EU country, 22% of the population lives below the poverty line, etc.

Thirdly, there is other pending litigation which concerns Corporate Commercial Bank (Corpbank) before the European Court of Human Rights, there is a claim against Bulgaria’s central bank and Bulgarian politicians under the US Racketeer Influenced and Corrupt Organizations Act, which alleges that Bulgaria’s central bank engaged in fraud to force the bank into artificial bankruptcy and to deviate assets, etc. I will not be surprised if Bulgaria’s government wants to use this “victory” as proof in these proceedings – namely, show its press releases.

Fourthly, Bulgaria is currently applying for ERM II (EU’s Exchange Rate Mechanism). It does not look good on a country’s “CV” that it settled over a claim which alleged it purposefully bankrupted a bank. One does not settle when one is sure one would win the case.

Fifthly, Bulgaria’s state institutions have been misinforming the public about what happened to Corporate Commercial Bank for years. If they are so convinced that what they did was legal, why did they settle with SGRF? Bulgarian citizens will be asking questions.

Harassment of government opponents as a national policy

In response to the government’s press release of Friday evening, on 26 August 2019 (Saturday morning) I published a post in Bulgarian on my blog. I reiterated my legal opinion. I also told them that a state institution should answer public concerns with substantive legal arguments and/or make this Award public for everyone to see. After all, if this is a great victory for Bulgaria, there is not anything to hide.

As it is usually the case, pro-government tabloids already attacked me. In the past they have published various tarnishing materials when I expressed public opinion which was not to the government’s liking. When I wrote a critical article about Bulgaria’s Presidency of the Council of EU, pro-government media accused me that I conspired with people who I, frankly, do not know to ruin the Presidency. When I made a video for my YouTube channel (which has roughly 200 subscribers) on human rights violations in Bulgaria, the same media accused me of “spreading fake news” and “tarnishing Bulgaria’s impeccable reputation”. The list is very long, but these are just illustrations. They are afraid of the slightest opposition.

The culmination of sadism and arrogance took place two years ago when Bulgaria’s government tried to kidnap me through Interpol abuse. They stalked me online to see which international conferences I would speak at as the schedule was public. They issued Interpol diffusions (secret Interpol notices) just for these countries. Interpol’s Headquarters have canceled those because Bulgaria issued them in violation of Interpol’s Rules. To the best of my knowledge, this is the first case in which Interpol officially admits that an EU member abused its system.

I am not by far the only one subjected to harassment. There are many journalists, civil society members, judges, prosecutors and people who are inconvenient because of their role in society who are abused on a daily basis. I just wanted to provide a personal testimony of why I believe harassment of people who are inconvenient for some reason (political reasons, economic reasons, etc.) is a national policy.

I also argue the above statement is a clear illustration that Bulgaria is not a state governed by the rule of law. It is a shame that EU institutions have tolerated and endorsed this regime for so long!

Finally, I am convinced that the above narrative may explain why others are afraid to criticize the regime publicly, which, in turn, sheds light on why so little is known about the abuses in Bulgaria. This is a vicious cycle!

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You can read the articles which made the Ministry of Finance angry here:

•  Liar, Liar, Pants on Fire! How Bulgaria Deliberately Misinformed the General Public about the Outcome in ICSID Case No. ARB/15/43 (SGRF v Bulgaria);
• An Arbitration Mystery and Bulgaria’s Rule of Law: How Arnold & Porter Gave Away the Existence of a Secret Deal.

You can read my response to the Bulgarian government after the press release here (Google Translate does a decent job):

• Министерство на финансите или Министерство на истината?

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You can follow me on Twitter @radosveta_vass.