In two parallel awards issued on 14 July 2025, the Sole Arbitrator appointed by the Milan Arbitration Chamber upheld the damages claims brought by two former directors of limited liability company who had been removed without cause following a change of control of the company itself.
In the first case, the Arbitrator held that the breakdown of the relationship of trust between a company and its director—which may constitute cause for removal and therefore exclude any entitlement to compensation—cannot be based on facts unrelated to the corporate relationship. In particular, any breach committed by the director in his separate capacity as a shareholder, in the context of negotiations concerning the sale and purchase of shares, cannot be relied upon as cause for a subsequent removal from the office. In other words, a director may be removed without financial consequences where he or she has breached statutory or fiduciary duties, or where trust has been lost for reasons arising within the corporate relationship. On the contrary, removal based on personal reasons or on circumstances unrelated to the relationship between the company and the director as such does not constitute valid cause.
In the second case, the Arbitrator clarified that the failure to reappoint a director whose mandate had terminated as a result of a simul stabunt simul cadent clause following the removal of another board member gives rise to an implicit removal. Hence, the reasons justifying the removal must be stated at the time the decision is taken and cannot subsequently be introduced or supplemented. In the absence of a valid cause communicated in a timely manner, the director is entitled to appropriate compensation for the loss suffered.