## Facts

- The dispute was decided by an arbitral tribunal seated in Italy in an award dated November 2011.
- XYZ s.p.a. (XYZ) was an Italian company with a two-tier governance system consisting of a board of supervisors and a managing board.
- Mr. A, along with Mr. B and Mr. C, were founding shareholders and initially served as the original managing board.
- In 2006, Mr. A, Mr. B, Mr. C, and other shareholders entered into a shareholder “collaboration agreement.”
- Under the collaboration agreement, the shareholders agreed that XYZ would use its best efforts to have the board of supervisors appoint A, B, and C to the managing board.
- The shareholders also agreed that XYZ would use its best efforts to have Mr. A appointed as managing director for six years.
- The collaboration agreement included a liquidated-damages provision if Mr. A were removed from the managing-director position without cause before the end of the six-year period.
- In 2010, the board of supervisors removed Mr. A as managing director, and Mr. A initiated arbitration against XYZ alleging breach of the collaboration agreement.
- After the arbitration began, the board of supervisors terminated Mr. A from his nonexecutive director position for cause.
- Italian law limited appointments of managing board members to terms no longer than three years, although reappointment for additional terms was possible.
- XYZ argued that the collaboration agreement was void as contrary to Italian law because it effectively committed XYZ to a term longer than the statutory maximum.

## Issues

1. Whether a collaboration agreement requiring best efforts to secure Mr. A’s appointment as managing director for six years, with liquidated damages for removal without cause, was invalid because Italian law limits managing-board appointments to three-year terms.
2. If the collaboration agreement was valid in whole or in part, whether Mr. A’s 2010 removal as managing director triggered contractual liability and liquidated damages.
3. Whether the board of supervisors’ later termination of Mr. A from his nonexecutive director position “for cause” affected any contractual claim arising from the earlier managing-director removal.

## Decision

- The arbitral tribunal issued an award in November 2011.
- The award’s specific disposition (including whether the collaboration agreement was found valid, whether XYZ was found in breach, and whether damages were awarded) is not available from the publicly accessible summary materials for this case.
- As a result, this brief cannot state the tribunal’s final holdings or relief without relying on information not contained in the accessible record.

## Legal Principles

- Under Italian company law, managing-board appointments are limited to a maximum term of three years at a time, even though reappointment may be permitted.
- Private agreements among shareholders (or contractual commitments attributed to the company) may be challenged when they are alleged to restrict or penalize the exercise of corporate bodies’ statutory powers of appointment and removal.
- A “best efforts” commitment concerning corporate appointments may raise validity and remedy questions when it operates as a practical guarantee of tenure beyond mandatory term limits.
- A liquidated-damages clause tied to removal “without cause” can make the characterization of the removal (with or without cause) significant for contractual remedies, subject to the governing law and the decision-maker’s findings.

## Conclusion

Mr. A v. XYZ, November 2011 (2011) concerns an Italian-seated arbitration arising from a 2006 shareholder collaboration agreement that sought to secure Mr. A’s six-year managing-director tenure and provided liquidated damages for early removal without cause, set against Italian law’s three-year limit on managing-board terms; however, the publicly accessible materials do not disclose the tribunal’s final ruling or remedy.
