Bulgarian citizenship by investment – unexpected hurdles for two valued customers, because of legal absurdity
Recently, two of our clients have experienced identical problems with their investment citizenship applications. Both have applied for Bulgarian citizenship at the same time in 2019. Both have purchased their Bulgarian Eurobonds through the same major bank in Bulgaria.
The Bulgarian Ministry of Justice acted and solved the problem in January 2020, but for them, it was too late already
So what went wrong? And why did the Bulgarian Ministry of Justice added in January 2020 new par.2 to Article 5g of the ORDINANCE № 1 OF 19 FEBRUARY 1999 ON THE IMPLEMENTATION OF CHAPTER FIVE OF THE BULGARIAN CITIZENSHIP ACT? Unfortunately for our two clients, the new legal text was published only on 14.01.2020 with the issue nr.4 of the State Gazette (too late for them).
The essence of the problem
Our two clients, an American and Jordanian, have both applied for fast-track citizenship. They have fulfilled all legal requirements and have passed their citizenship interviews in 2019.
Shockingly, the Citizenship Council has issued negative recommendation to the President, not to grant them Bulgarian citizenship, because “there is no data that their investment is maintained“.
[un]Fortunately the investments of both our clients have been maintained – and all this has been duly documented
There is no data that the investment is maintained? You gotta be kidding!
The Eurobonds – not sold
After the shock, we thought ok, maybe they have indeed sold their bonds? Remember, the investment for the Bulgarian citizenship by investment program is never blocked, so the applicant can basically dispose of it at any time without advance notice. Fist things first, so we asked. And they both, surprised by our question, have confirmed that the bonds are intact.
Bank accounts – not compromised
Our next action was to check the state of their investments. We even thought about the unthinkable. What if they have been defrauded? What if their bank accounts were somehow compromised and their investments stolen? Both clients were using the same bank, which raised a red flag. Fortunately, after urgently contacting the bank, it appeared that the investments were all in place.
So what the heck?
Then we realised that the wording of the rejection was somewhat unclear, vague. The Citizenship Council didn’t state that “the investment is not maintained“. It stated instead that “there is no data that the investment is maintained“. Tiny difference, but quite an important one. If they have stated that the investment is not maintained, that would be a blatant lie. But stating that “there is no data” is far less binding and therefore safer to state.
Checking the files – all perfectly in order
Our next step was to check that everything with the legally required “proof of the investment” was in order. This is namely the certificate that is obtained from the Bulgarian Investment Agency, confirming that the investment is available.
Everything was perfectly fine. All paperwork was 100% in order, dully submitted and in strict accordance with the current legislation. In fact this can’t be otherwise, as the applicant can not even submit the application without the investment certificate dully attached. Well thought by the authorities.
So why did the Citizenship Council tell that there is no data that the investment is maintained
The validity of the investment certificate from the Bulgarian Investment Agency is 6 months. The investment certificate needs to be valid at the moment when the citizenship application is submitted. And not when the Citizenship Council is reviewing the application. This is absolutely clear and is cited in decision № 2351 of the Supreme Administrative Court of the Republic of Bulgaria from 24.02.2017.
The ruling of the Supreme Administrative Court
What the Supreme Court basically stated in its decision is that:
“The substantive legal requirements (to obtain citizenship by investment semi-fast-track) are: that the person applying for citizenship is a foreigner who has a permanent residence permit and is responsible as of the date of submission of the application under Art. 29 of the Law for the Bulgarian citizenship of the specific requirements of art. 12, para 1 items 1-4 incl. Among the material prerequisites of the law there is no requirement for investment under Art. 25, item 6 (the bond investment in our case) of the Law for the foreigners to be available as of the date of the opinion of the Citizenship Council.“
“For this reason, by introducing an additional condition and by requiring the investment under Art. 25 (the bond investment in our case) of the Law for the foreigners to be available at the time of giving an opinion to the subsidiary body – the Citizenship Council, the administrative body – the Minister of Justice has violated the substantive requirements of the Law for the citizenship, thus issuing an illegal administrative act.“
You can download rough (Google) translation of the Supreme Court decision:
Obvious and logical
So everything seems to be obvious. The decision of the Supreme Court is clear. It is also quite logical. The validity of the certificate should be observed only at the moment of the application. The applicant has no control of when the Citizenship Council will give an opinion on the application. It can be that the certificate will be older than six months by then, thus expired. And there is no legal way of submitting updated (new) investment certificate after the citizenship interview. So far so good, the Supreme court has ruled. And now the Citizenship Council and the Ministry of Justice would need to comply.
The hypocrisy of the authorities
No matter the decision of the Supreme Court, the Citizenship Council and the Ministry of Justice think otherwise. What they want is to have valid investment certificate at the time when they give opinion on the citizenship application. While they know very well that they can always wait until the certificate expires and then issue negative recommendation to the President.
But isn’t it illegal to check the availability of the investment after the citizenship interview?
Yes, this is in breach of the Law and the decision of the Supreme Court. But there is a problem, very serious one. And we really hope that the Citizenship Council is not misusing this legal absurdity, which we will explain below.
The decision of the Citizenship Council to give negative opinion to the President CAN NOT be appealed in Court
Yes, you read it correctly – the decision of the Citizenship Council can not be appealed in the Court of Law. No matter how illegal it is. This came after a subsequent decision of the Supreme Administrative Court № 9733 from 20.07.2017. It derogated the previous decision of the same Court and has basically ruled that:
The decision of the Citizenship Council to issue recommendation to the President to grant (or not) citizenship is purely a recommendation and is not a condition upon which the President is obliged to act. For this reason this is not an “individual administrative act” and can not be appealed in Court.
Basically the Court said that the right of the President to issue citizenship decree is his constitutional right and can not depend on any other institution. The Citizenship Council only advises the President to grant citizenship or not, but the President can decide whatever he wishes to.
In practice however, it is extremely unlikely that the President will ever grant citizenship after a negative recommendation from the Citizenship Council.
So what options are we now left with?
The solution to the problem
The solution to the problem came with the new par.2 to Article 5g of the Ordinance № 1 on the implementation of the Bulgarian Citizenship Act. The Ministry of Justice added in January 2020 new text, that should eliminate such problems from then on. The new article reads that:
The Bulgarian Investment Agency and the Ministry of Economy shall send officially (ex officio) to the Ministry of Justice the certificates under para. 1, items 1 and 2 (the investment certificate).
So for the applicants who have applied for citizenship by investment after January 2020, the problem should be non-existent.
And what about our two clients
The attempt to appeal in Court proved to be unsuccessful. The Courts ruled out that the decision of the Citizenship Council is only a recommendation to the President to either issue citizenship decree or not. Therefore it is not an individual administrative act and hence, can not be overruled by the Court.
The decision (not to issue a decree) of the President can not be appealed in Court neither as this is not an administrative act, but an order (decree) by the President, which is indisputable by the Constitution.
So we are now advising our clients to undertake the following actions:
New application for Citizenship by investment
Our clients should submit new application for Bulgarian citizenship asap. The new application will be now covered by the new legal text of January 2020 regarding the investment certificate. The certificate should be now send directly to the Ministry of Justice by the Bulgarian Investment Agency and the Ministry of Economy.
File a case for compensation from the Bulgarian state under the LAW ON THE RESPONSIBILITY OF THE STATE AND THE MUNICIPALITIES FOR DAMAGES.
In Bulgaria getting compensation is a difficult task. In times, it is close to impossible. But in this particular case, the injustice by the authorities is so blatant, that we would be really eager to assist our clients achieve the, what many would think, is impossible.
For additional information
In the event that you have been also affected by this particular legal absurdity (before it was rectified in January 2020), please contact us a.s.a.p. We may be able to help you too, as we hope we will be able to help our valued clients.