US embassy cable - 05SOFIA1318

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.