What happens when, in a matter of days, an arbitrator can order the State to suspend administrative acts or the execution of guarantees?
As is known, Article 4 of the Ecuadorian Arbitration and Mediation Law (LAM) authorizes the public sector to submit to arbitration under two critical conditions: the existence of a valid arbitration agreement and the issuance of a binding opinion by the Office of the Attorney General (Procuraduría General del Estado, PGE). This ensures prior political–institutional oversight. Additionally, Article 9 empowers arbitrators to issue interim measures, even allowing for direct enforcement or judicial assistance. This provision lays the legal foundation for urgent relief, later incorporated into the context of emergency arbitration through implementing regulations.
However, the Organic Law of the Office of the Attorney General (LOPGE) does not expressly regulate emergency arbitration. What it does provide is a general framework: Articles 5 and 6 require the Attorney General to intervene and be formally notified in any arbitration involving the State, under penalty of nullity; Article 11 demands express authorization to submit to international arbitration; and Article 9 grants public entities twenty days to respond to claims. This period, designed for ordinary proceedings, clashes directly with the ultra-fast timelines of emergency arbitration.
To this mosaic, we must add the 2021 Regulation of the LAM, which formally incorporated the emergency arbitrator but merely enabled the figure and delegated its detailed regulation to arbitration centers—without setting out specific adaptations when the respondent is a public entity.
The law does not prohibit emergency arbitration, but neither does it regulate it strictly. This legislative omission creates a tangible conflict: while the PGE needs time to coordinate an institutional defense, emergency proceedings require an immediate response—placing the State at a disadvantage because its own institutional structure forces it to react late.
In practice, it is the Arbitration Centers that have defined how emergency arbitration operates in Ecuador:
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Quito Chamber of Commerce (CCQ) Rules: recognize the emergency arbitrator and set a maximum of 15 days to issue a decision. Their powers include suspending bond calls, preventing unilateral terminations, or halting ongoing contractual acts.
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AMCHAM Rules: in addition to requiring speed, they introduce a novel disciplinary element—strict sanctions against arbitrators who fail to observe impartiality or due process, including removal from institutional rosters.
In practice, both sets of rules have created a robust and highly expedited mechanism. Yet this also means that, when the State is involved, it may be forced to face measures—issued within days—that directly impact its contractual, financial, or administrative capacities, decided by arbitrators endowed with broad powers and under extreme time pressure.
The contractor knows when and how to trigger this mechanism and can prepare its request for interim measures weeks in advance. The State, by contrast, only learns of the case upon notification and must react in less than ten days. To do so, it must simultaneously coordinate the contracting agency, technical advisors, external counsel, and the PGE.
Should the State restrict or exclude emergency arbitration through contractual clauses?
On one hand, limiting this mechanism seems justified: it would prevent emergency arbitrators from interfering in strategic actions—such as unilateral contract terminations or the execution of guarantees—and would avoid the procedural disadvantage caused by the impossibly short 5-to-15-day response periods, incompatible with the extended timelines of the public sector.
However, excluding the State from emergency arbitration also comes at a high cost: it would project mistrust toward arbitration, discourage foreign investment, and disrupt contractual balance, leaving contractors without effective tools against administrative machinery.
Therefore, the solution lies not in prohibiting emergency arbitration involving the State, but in better regulation:
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establishing timelines compatible with the PGE’s participation;
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requiring mandatory counter-security when measures affect public funds; and
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setting clear limits so that emergency arbitrators preserve only the contractual status quo, without encroaching on public powers.
Moreover, the State could include in its arbitration clauses partial “opt-out” provisions, specifying that certain matters—such as the suspension of bond calls or the prohibition of terminating contracts of public interest—cannot be subject to emergency measures.
Thus, the State would not renounce its role as guardian of the public interest, nor would it compromise its commitment to a modern and reliable arbitration system, offering investors certainty in dispute resolution.
The 2025 cases vividly illustrate the State’s vulnerability in emergency arbitration:
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Progen–Quevedo III and Progen–Salitral (July 2025): arbitrators rejected the contractor’s requests, allowing CELEC to enforce guarantees and terminate contracts unilaterally.
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Austral–Esmeraldas III (August 2025): the tribunal suspended multimillion-dollar fines and prohibited unilateral termination, protecting the company against the administration.
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Progen–Termopichincha (Procedural Order No. 3, June 17, 2025): the emergency arbitrator upheld jurisdiction and ordered CELEC to refrain from unilaterally terminating the contract or enforcing the performance bond. The arbitrator even instructed Confianza Compañía de Seguros y Reaseguros S.A. to abstain from executing the guarantee, to preserve the status quo and prevent the arbitration from becoming moot.
These divergent outcomes—issued within weeks—share a common denominator: the State faces massive economic and operational consequences under procedural deadlines so short that they prevent the PGE from mounting a coordinated defense.
This dilemma is not unique to Ecuador. Comparative practice shows similar challenges: under the ICC Rules, the emergency arbitrator must decide within 15 days, though orders are reviewable and excluded from investment arbitrations. The SIAC, in its 2025 reform, went further by introducing ex parte protective preliminary orders, allowing immediate suspension of guarantee executions—closing a critical gap in time-sensitive cases. The HKIAC, meanwhile, can appoint an emergency arbitrator within just two days, reinforcing the notion of extreme urgency. Across all these institutions, the applied standards derive from the UNCITRAL Model Law: urgency, irreparable harm, proportionality, and likelihood of success. Yet, tension persists because most rules do not allow ex parte decisions, making emergency arbitration ineffective in cases where bond calls are executed immediately.
Ultimately, the LOPGE does not contemplate emergency arbitration, but its timelines and formalities collide head-on with the ultra-rapid nature of this mechanism. The LAM and the rules of the arbitration centers do authorize emergency arbitration, but recent practice shows that, without regulatory adjustments, the State remains at a structural disadvantage.
As Sim notes in Emergency Arbitration (Ch. 9, p. 233): “The effectiveness of emergency arbitration will depend as much on judicial enforceability as on the discipline with which interim standards are applied.”
The solution, therefore, is not to eliminate this mechanism, but to regulate it intelligently: by setting timeframes that allow the PGE to fulfill its role, requiring adequate counter-security to safeguard public funds, and defining clear limits to prevent emergency arbitrators from encroaching upon administrative powers. Only then will emergency arbitration cease to be a source of procedural disadvantage for the State and instead consolidate as a legitimate, reliable, and balanced tool for both public and private contracts.