23 September 1122 A.D. Investiture Controversy. Concordat of Worms
The Concordat of Worms, sometimes called the Pactum Calixtinum by papal historians, was an agreement between Pope Calixtus II and Holy Roman Emperor Henry V on September 23, 1122 near the city of Worms. It brought to an end the first phase of the power struggle between the Papacy and the Holy Roman Emperors and has been interpreted as containing within itself the germ of nation-based sovereignty that would one day be confirmed in the Treaty of Westphalia (1648); in part this was an unforeseen result of strategic maneuvering between the Church and the European sovereigns over political control within their domains. The King was recognized as having the right to invest bishops with secular authority ("by the lance") in the territories they governed, but not with sacred authority ("by ring and staff"); the result was that bishops owed allegiance in worldly matters both to the pope and to the king, for they were obligated to affirm the right of the sovereign to call upon them for military support, under his oath of fealty. Previous Holy Roman Emperors had thought it their right, granted by God, to name the pope, as well as other Church officials, such as bishops. One long-delayed result was an end to the belief in the divine right of kings. A more immediate result of the Investiture struggle identified a proprietary right that adhered to sovereign territory, recognizing the right of kings to income from the territory of a vacant diocese and a basis for justifiable taxation. These rights lay outside feudalism, which defined authority in a hierarchy of personal relations, with only a loose relation to territory. The pope emerged as a figure above and out of the direct control of the Holy Roman Emperor.
http://en.wikipedia.org/wiki/Investiture_Controversy : there is more at URL
On the European mainland, after 50 years of fighting, a similar compromise (but with quite different long-term results) was reached in 1122, signed on 23 September and known as the Concordat of Worms. It was agreed that investiture would be eliminated, while room would be provided for secular leaders to have unofficial but significant influence in the appointment process.
While the monarchy was embroiled in the dispute with the Church, it declined in power and broke apart. Localized rights of lordship over peasants grew, increasing serfdom and resulting in fewer rights for the population. Local taxes and levies increased while royal coffers declined. Rights of justice became localized and courts did not have to answer to royal authority. In the long term the decline of imperial power would divide Germany until the 19th century. Similarly, in Italy the effect of the investiture controversy was to weaken the authority of the emperor and to strengthen all those local forces making for separatism.
As for the papacy, it gained strength. During the controversy, both sides had tried to marshal public opinion; as a result, lay people became engaged in religious affairs and lay piety increased, setting the stage for the Crusades and the great religious vitality of the 12th century.
The dispute did not end with the Concordat of Worms. There would be future disputes between popes and Holy Roman Emperors, until northern Italy was lost to the Empire entirely. The Church would turn the weapon of Crusade against the Holy Roman Empire under Frederick II. According to Norman Cantor:
The investiture controversy had shattered the early-medieval equilibrium and ended the interpenetration of ecclesia and mundus. Medieval kingship, which had been largely the creation of ecclesiastical ideals and personnel, was forced to develop new institutions and sanctions. The result during the late eleventh and early twelfth centuries, was the first instance of a secular bureaucratic state whose essential components appeared in the Anglo-Norman monarchy."