UNCLAS SOFIA 001318

SIPDIS


E.O. 12958: N/A
TAGS: ASCH PREL KTIA BU
SUBJECT: BULGARIAN COURT REJECTS JEWISH COMMUNITY PROPERTY
CLAIM


1. SUMMARY: In a July 6 decision, the details of which
were not available until July 20, Bulgaria's highest court
rejected the property claim of the Jewish community over a
valuable piece of land in downtown Sofia that was
nationalized during Communism and used for hotel
construction. The decision has put an end to a nearly
decade-long legal battle with the management company of the
Rila Hotel, which bought a majority share of the property
after the state privatized it in 2000. Despite its
inconsistency with the reasoning in previous decisions, the
Supreme Cassation Court ruling will likely preclude further
claims in the Bulgarian court system. END SUMMARY


2. Background: The land on which the Rila Hotel now stands
was originally acquired by the Jewish community in 1906-
1911, and was the site of a Jewish school for a period of
time. The property was nationalized by the state in 1962
for the purpose of building a hotel. In 1991, two years
after the end of Communism, the State Arbitration Board
ordered the Sofia municipality to turn over 48.87% of its
ownership of the Rila Hotel to Shalom, the Jewish
community's legal and administrative organization in
Bulgaria. However, the ruling was never enforced. In 1996
Shalom initiated a suit to separate the 48.87% that Shalom
claimed as the successor of the Sofia Israeli Synagogue
Trusteeship from the other assets of Rila hotel. Meanwhile,
in 2000, the state privatized a 51% stake in the Rila Hotel,
which was bought by a company associated with gambling boss
Vassil Bojkov, a.k.a., the Skull. Shalom's separation suit
was twice rejected by the courts on the basis that Shalom
failed to produce sufficient evidence that it was the
legitimate successor of the Jewish organization that owned
the property prior to its nationalization.


3. Although this decision affirmed the ultimate ruling of
the previous two courts, the logic behind the decision is
different. Unlike the lower courts, the Supreme Cassation
Court found Shalom to be the legitimate successor of the
specific Jewish community that acquired the property in 1906-

1911. However, the Supreme Cassation Court held that when
the property was nationalized in 1962 by the state, funds
were allocated at that time to compensate the Jewish
community for the property. The court decision does not
specify either the amount or the exact recipients of this
compensation. Nevertheless, the court found that this
expropriation procedure, including the compensation, was
adequate and properly executed. Therefore, the state is
seen to be the legitimate owner of the property from that
point on, and for this reason the Supreme Cassation Court
denied Shalom's claim.


4. Prior to the decision by the Supreme Cassation Court,
the incumbent hotel owners offered Shalom's president, Emil
Kalo, a deal valued at approximately $321,000 in return for
settling the dispute outside of court. The American Joint
Distribution Committee urged Shalom to turn down the offer,
which it did, and arranged for international legal
consultants to assist with the case.


5. (SBU) Kalo told us that the court's decision came as no
surprise to him. Despite efforts to publicize the case in
the international press and garner public support for
Shalom's claims, Kalo has always been concerned about
Bojkov's ability to influence the court.


6. COMMENT: The Supreme Court decision is final and
effectively precludes any further legal claim over the Rila
Hotel property by the Jewish community. If Shalom is not
able to invoke a special court procedure to reverse the
decision, the only option left is to refer the matter to the
European Court of Human Rights and seek compensation from
the Bulgarian state. Kalo, however, does not favor this
course of action, for fear of the effect it might have on
the state's generally benevolent attitude towards Shalom.
While the Supreme Court's hearing, which took place on May
17, had been widely covered both by international and local
media, the decision received little publicity.