"contravened the decree of the Council of Trent forbidding all such challenges"

   Duelling was prohibited under the harshest penalties the Church could enforce following the Council of Trent (which convened between 1545-1563).  By allowing a public battle to take place within his territory the Duke risks losing it forever, as well as being excommunicated along with both combatants and all spectators present.  The combat is averted at the last minute, although this is against the wishes of the Duke himself whose actions remain highly questionable.

Online copy of the Council of Trent Session Twenty-Five (relevant passage: Chapter XIX of the Eighth Decree)