In what has become a long-running duel of epic proportions, Sidley recently achieved an important legal victory for the European Union and longtime client Airbus, Europe’s aircraft-making leader. Judges from the World Trade Organization (WTO) recently upheld an earlier ruling that Airbus’s rival, Boeing Co., received billions of dollars of government subsidies to compete with Airbus, ultimately causing harm to the latter’s sales and market share.
This result was unprecedented. In 2011, for the first time in the decades-long history of this fight over government subsidies, Airbus secured a multilateral finding that the United States was providing illegal subsidies that caused serious commercial harm to Airbus. The ruling enabled the European Union to request authorization to take retaliatory action against U.S. exports for $12 billion annually, to counter the illegal U.S. practices.
This result was achieved through the coordinated efforts of Sidley’s International Trade group and Airbus, which have worked together for nearly 13 years. The Sidley team, led by Todd Friedbacher, a partner in Sidley’s Geneva office, consisted of dozens of professionals from the firm’s offices in Geneva, Brussels, London and Washington, D.C. Lawyers in D.C. focused on various support measures for Boeing under U.S. law, while lawyers in Brussels and Geneva focused on measures for Airbus from France, Germany and Spain. Colleagues in London advised on matters pertaining to English law. Close coordination among these offices facilitated the alignment of arguments—without close coordination, it would not have been possible to manage the complexities of WTO cases alleging harmful subsidies to each manufacturer.
The history of the subsidies fight between Airbus and Boeing spans decades since the 1960s, with each manufacturer and their respective governments accusing the other of providing and receiving unfair trade subsidies. Friedbacher puts the scale of the disputes in context, saying they are by far the biggest the WTO has ever handled since its inception in 1995. “Boeing and Airbus are the United States’ and the European Union’s largest exporters. If things go poorly for either company, it can affect hundreds of thousands of jobs and their national economies.”
“You really have to get inside the machine and form a cohesive team with the client and other stakeholders in a case like this,” says Friedbacher, who, together with his group, works with numerous departments inside Airbus’ global enterprise, including its legal, finance, sales and procurement divisions. Moreover, Sidley’s team has unparalleled experience with the substantive elements of WTO law, and the unique procedural challenges of WTO dispute settlement needed to work effectively before the WTO courts. As WTO dispute settlement is a government-to-government exercise, the Sidley team assists the EU, on behalf of Airbus, in the preparation of EU submissions before the WTO courts, and also works with the four principal EU member States hosting Airbus — France, Germany, Spain and the United Kingdom.
In terms of the volume of economic activity at stake, said Friedbacher, “The 20-year outlook for large civil aircraft sales exceeds $2.6 trillion—not even mentioning Airbus parent EADS’ and Boeing’s lucrative defense businesses. Our goal is to ensure that our client gets a fair shot at securing as much of that market as possible, by using global trade rules to ensure a level playing field.”