A Hong Kong import and export company recovers losses in cross-border N95 mask trade dispute

Due to the COVID-19 pandemic, a Hong Kong-based import and export company sourced masks from Mainland China to be sold in the United States. In September 2020, the company purchased several million non-medical N95 masks from a Shanghai-based mask manufacturer (Company A).

The sales contract stipulated that Company A must hold the relevant licence granted by National Institute for Occupational Safety and Health (NIOSH) in the United States. However, in August 2021, NIOSH revoked Company A’s licence, and the US Food and Drug Administration (FDA) issued a notice requiring the cessation of the use of non-medical N95 masks produced by Company A. As a result, the masks purchased by the Hong Kong import and export company could not be sold in the United States.

This case, set against the backdrop of the COVID-19 pandemic, was an international trade contract dispute triggered by changes in circumstances, highlighting the typical predicament of being unable to achieve the fundamental purpose of a contract due to drastic external changes.

Legal counsel

The Hong Kong import and export company suffered significant losses and subsequently entrusted Wang Yizhou and his team from Zhejiang Zeda Law Firm to assess the situation and file a lawsuit against Company A for anticipatory breach. In 2023, the parties ultimately reached a settlement, with the Hong Kong company recovering part of the funds and mitigating substantial losses.

Key aspects

(1) Cross-border evidence collection, notarisation, and authentication

All relevant documents for the Hong Kong import and export company required notarisation through Hong Kong SAR to ensure their legal validity was internationally recognised. The case involved a complex and voluminous set of evidence, with the challenging requirement that these documents undergo extensive evidence collection, notarisation, and authentication processes in Los Angeles, United States. This significantly increased both the difficulty and cost of handling the case. Furthermore, the extended duration of the case posed additional challenges to evidence collection, making the overall progress arduous.

(2) Seeking cross-border judicial support to advance litigation

Wang and his legal team conducted a thorough legal analysis and argumentation on the jurisdiction issue, successfully securing acceptance of the case by the Shanghai First Intermediate People’s Court. Based on this, Wang’s team guided the Hong Kong company across geographical boundaries to collect and fix key evidence in various regions of the United States and the Hong Kong SAR. Meanwhile, the legal team systematically integrated and organised the collected evidence, flexibly adjusted litigation strategies and approaches, and ultimately established an efficient and targeted litigation method, laying the foundation for the advancement of the case.

(3) Effective mediation leads to recovery of substantial losses

The case culminated in a mediation agreement, facilitated by the court’s efforts. Company A agreed to return the contract funds for the unsold portion of the masks. The litigation objectives of the Hong Kong import and export company were achieved within a short timeframe.

案例链接：https://www.legaloneglobal.com/deal/d-1730087727334