I. Case Summary

In 2021, Company A, a Trade Broker registered in U.S., arranged the purchase of plywood goods (“the Cargo”) and carriage for US Buyers from a Chinese Seller. It, also on behalf of the U.S.Buyers (“the Insureds”), effected Ocean Marine Cargo insurance arrangements covering All Risks with Company B, a major Chinese insurer (“the Insurer”).

In November 2021, the cargo was loaded into five holds of an ocean-going vessel for carriage from loading ports China to U.S. disports. A few days after the vessel’s departure from China, fire incidents broke out successively in two cargo holds. The fires were finally extinguished, and the Cargo were discharged at multiple unscheduled ports of refuge and then the port of destination.

Surveys conducted on behalf of the Insurer and the Insureds all acknowledged that the Cargo in two fire-affected holds suffered heavily fire, smoke contamination and water damage. In addition, cargo in the remaining three holds sustained damage of varying degrees.

Company A preliminarily calculated that the value of cargo loss and expenses for loss mitigation exceeded US $10 million. Company A raised a Letter of Claim to the Chinese Insurer B. However, the claim was declined on the ground that the cause of fire had not been ascertained, damaged goods had not been fully disposed of and the amount of cargo loss remained undetermined.

In August 2022, Company A, acting on behalf of U.S. buyers (our clients), through retained U.S. counsel, retained HiHonor Law Firm to handle the marine cargo insurance claim against the Chinese Insurer (Company B).

II. Case Handling

Following instruction, our firm commenced negotiations with the insurer concerning the undisputed portion of the claim. We sent multiple demand letters and continued to engage in negotiations. Supported by solid evidence and sound legal arguments, we first isolated the undisputed segment of the claim for settlement.

In March 2023, we successfully secured advance payment of over US$ 7 million for our clients. This significantly relieved the client’s cash‑flow strain and reduced pressure for subsequent pursuit of the remaining claim.

Where China domestic negotiations on the disputed-claim segment yielded no further breakthroughs, HiHonor lawyers had rounds of in-depth discussions via Company A with our clients and the U.S. lead counsel, analyzing the merits and demerits of triggering litigation respectively in China and in U.S. for the subject matter. Following the clients’ decision to pursue U.S. litigation, our lawyers provided ongoing support to the U.S. lead counsel during the U.S. proceedings, assisting with cross‑border service of U.S. court documents and the submission of Chinese‑law legal opinions/declaration to the U.S. court.

In the first half of 2025, during the U.S. litigation, our clients (the insureds) reached a lump sum settlement agreement with Chinese Insurer B and related‑party C in respect of the disputed portion of claim.  Under the settlement terms, Chinese Insurer B and company C were each to pay several million US dollars in compensation to our clients (the insureds).  By October 2025, our clients confirmed receipt of the full settlement sums.

III. Highlights

Faced with voluminous evidence arising out of multiple incident‑related issues, our team systematically sorted and organized the case materials, assisted the clients in clarifying the cause(s) of cargo damage and accurately quantified the claimed loss amount.

Taking into account the legal opinion from the lead U.S. counsel team, we assessed and compared litigation risks in U.S. and China, and finally adopted a flexible combined strategy of negotiation in China and litigation in U.S. During U.S. proceedings, our firm continuously provided legal assistance including but not limited to fact collation, negotiation debriefing, judicial service, enabling efficient resolution of the cross-border dispute.