ITALY Trends and Developments Contributed by: Michele Massironi, Maria Giulia Furlanetto, Fabio Dalmasso and Riccardo Siligardi, La Scala S.t.a.p.a.
work of the conventional indemnification terms. This is essential if the parties’ interest is to main - tain the situation realised after the acquisition rather than restoring the previous one. Exit strategy: Russian roulette clause under Italian law The Russian roulette clause is one of the main mechanisms used to deal with a deadlock situ - ation, usually after it has been escalated without reaching a solution. When an M&A transaction falls into a joint investment where a deadlock situation can be envisaged (for example, two shareholders each have a 50% interest in the company), the Russian roulette clause is a rem - edy that is nice to have. A common Russian roulette clause provides that one party (A) offers to buy the other party’s (B) interest in the company at a price determined by the offeror. Then, generally, B has a limited period of time in which to decide whether or not to sell its interest at the price offered by A or, if it does not desire to sell its interest, to purchase A’s interest at the same price. If B does not reply within the given term, B may be deemed to have accepted A’s offer to buy its interest. This mechanism was not expressly recognised within the Italian legal system as there was (and still is) no specific legal provision on this issue and the case law was lacking. Therefore, the Russian roulette clause was not commonly used in Italy, nor in other European countries, being a clause typically recognised in the common law legal systems. Part of the doctrine believed that such clause was contrary to mandatory provi - sions of Italian law. However, in 2019 the Notary Council of Milan published a study in which it held that the inclu - sion of the Russian roulette clause in the by-
laws of a company incorporated under Italian law is valid, provided that the fair valorisation criteria of the interest provided by Article 2437 ter of the Italian Civil Code are not affected. For the sake of clarity, Article 2437 ter of the Italian Civil Code provides that the value of the interests shall be determined by taking into account the company’s assets and profitability prospects, as well as the market value of the interests, if any. With regard to the case law, the first Italian court decision on this matter was issued by the Court of Rome on 19 October 2017. Such decision acknowledged the validity of the Russian roulette clause contained in a shareholders’ agreement governing, inter alia, eventual deadlock events in the management of an equally owned company. The decision was then confirmed by the relevant Court of Appeal on 3 February 2020; finally, on 25 July 2023, the Italian Supreme Court defini - tively recognised the suitability of that clause with the Italian legal system. The Italian Supreme Court clarified that the Rus - sian roulette clause is not contrary to mandatory provisions of the Italian Civil Code and that it is valid because it pursues the legitimate interest of the parties to avoid or, in any case, to overcome the occurrence of deadlock events. Indeed, according to the Supreme Court’s opinion, the Russian roulette clause does not constitute a merely discretional condition attributed to one party against the other (that would be consid - ered null and void under Italian law according to Article 1355 of the Italian Civil Code), and nor does it lead to a contract having an arbitrary or indeterminate subject since the offeror’s deter - mination of the price may be reversed against them by the decision of the other party to pur - chase its interest and, under these circumstanc - es, Italian law allows a party to determine the subject of an agreement unilaterally.
967 CHAMBERS.COM
Powered by FlippingBook