Arbitrators say Massachusetts Mutual Life Insurance Company has failed to show that it had cause to fire Robert O’Connell from his posts as chairman and chief executive officer in June 2005 without paying him the severance benefits described in his employment agreement.

A 3-member panel assigned by the American Arbitration Association, New York, has ruled unanimously that MassMutual, Springfield, Mass., should pay O’Connell severance benefits.

O’Connell’s lawyers, Michael Keating and Dean Richlin of Foley Hoag L.L.P., Boston, believe the arbitration ruling requires MassMutual to pay O’Connell a $50 million award and also to cover the cost of the arbitration expenses and of O’Connell’s legal bills, O’Connell’s representatives say.

The arbitrators agree with MassMutual that O’Connell may have violated MassMutual rules by using previous-day closing prices when buying stocks and mutual funds for a “supplemental compensation account,” which gave O’Connell the ability to simulate participation in an account that invests in actual stocks and funds.

But O’Connell did not violate any laws, and he and MassMutual can cure the problems by resetting account values to eliminate any gains obtained as the result of misuse of previous-day prices, the arbitrators write in a document explaining their award.

The arbitrators also dismiss arguments that 3 alleged affairs with MassMutual employees constituted willful gross misconduct or did serious harm to the company.

“Even under MassMutual policies, romantic relationships are not treated as akin to criminality,” the arbitrators write.

Even when one individual in an affair has work-related authority over another, “the policy provides only for disclosure and discussion of possible issues and alternative arrangements,” the arbitrators write.

O’Connell’s lawyers allege that the MassMutual board relied on a biased presentation of stale evidence when it decided to fire O’Connell, and that the board failed to give O’Connell a chance to respond to the allegations.

MassMutual says the arbitration panel agreed that the company had the right to dismiss O’Connell, and it says it will appeal the panel’s conclusion that the termination was not “for cause.”

The MassMutual board believes O’Connell subverted MassMutual’s governance system to hide self-dealing activities, the company says.

“Therefore, we have decided to appeal based on the public policy and ethical standards implications that our board feels the panel failed to address when it made its decision,” MassMutual says.

MassMutual believes the case will have no material effect on its financial results, even if the company ends up losing the appeals, the company says.