The Russian roulette clause - which is also called the “cowboy clause” - is not, contrary to what one might think, a Wild West clause, but rather a clause frequently used to avoid or minimize the risk of a corporate impasse. This type of clause grants each of the partners the opportunity to propose an irrevocable offer to purchase. To be precise, there are various forms of the Russian roulette clause.
One of these variations is the so-called “Texas Shot-Out” clause. This form involves one of the partners making a purchase offer to the other partner. The other partner has the option of accepting or increasing the offer. This mechanism continues until one of the partners accepts the offer.
Another well-known variant is also the “Mexican Shoot-Out” clause. This form requires the partners to indicate a minimum purchase price. In such a case, the highest bidder - that is, the one who makes the highest bid - has the right to purchase the other’s share at the lowest price indicated by the other.
Finally, mention may also be made of the so-called “Sicilian” version, in which case the partners formulate a purchase offer in a sealed envelope and give it to a neutral person. The partner who has made the highest bid is obliged to buy the shares of the other partner at the specified price.
In the above-mentioned decision, the Supreme Court affirmed that a Russian roulette clause “included in the shareholders’ agreements of a special purpose company involving two partners with identical shareholdings” is valid and an expression of their interest in avoiding deadlock situations. These kinds of clauses are valid insofar as they do not determine merely potestative conditions and do not violate the prohibition of leonine covenants (i.e., the prohibition of completely excluding a partner from profits or losses).