N.Y. Department of Health Sues Chinese Company Over Mask Supply Dispute

On Wednesday, the New York State Department of Health (NY DOH) petitioned the Supreme Court for Albany County, New York for a stay of arbitration in their litigation against China-based company Rusi Technology.

When the COVID-19 pandemic began, the petition said, the state was in need of medical respirators to “help cover the shortfall in personal protective equipment for medical personnel and first responders.” The state of New York was forced to take an active role in obtaining the personal protective equipment for its medical workers when the state became the “global epicenter” of the COVID-19 pandemic in 2020. The defendant offered to supply the necessary supplies to the plaintiff, specifically offering both N-95 and KN-95 masks.

After negotiating and settling on a contract, the NY DOH said they partially paid Rusi, and they subsequently shipped the masks. When the NY DOH received the masks, they noted that a significant number of the masks did not adhere to the specifications outlined in the contract between the two parties. The NY DOH determined that this constituted a breach in contract and withheld the remaining balance due to Rusi.

When they did not receive payment, Rusi provided the New York State Office of General Services a notice of arbitration, which the office had to then forward to the NY DOH. The NY DOH argues that when they signed the contract, Rusi agreed to their terms which require arbitration proceedings to be brought to New York. Since the plaintiff never agreed to hold arbitration proceedings out of China, where Rusi is based, they are seeking an order “permanently staying the Chinese arbitration proceedings.”

The NY DOH also requires a preliminary stay of the proceedings so that unauthorized findings do not occur. The complaint seeks a stay of the arbitration submitted by the defendant and any other relief deemed proper by the Court under the circumstances of the suit.