A recent arbitration ruling in Ecuador has spotlighted the mounting contractual risks for Latin American nations partnering with Chinese state-owned companies on mega-infrastructure projects. The decision, which dismissed a multi-million-dollar lawsuit filed by China Road and Bridge Corporation (CRBC) against the municipality of Quito, has intensified the debate over transparency and regulatory oversight in the region.
The Guayasamín Road Solution case: Origins and controversy
The Guayasamín Road Solution megaproject was awarded in April 2016 through a strategic alliance between CRBC and the Quito Metropolitan Public Mobility and Public Works Company, with an estimated budget of $130 million. Its objective was to improve the connectivity between the capital’s north-central zone and the eastern valleys, Ecuadorian daily Primicias reported.
However, the project faced immediate controversy. Early stages were criticized for a lack of finalized technical studies and for specific contractual clauses that granted the Chinese company 90 percent of toll revenues for 30 years. The project’s design also excluded public transport, prioritizing private vehicles and drawing criticism that it undermined comprehensive mobility solutions, according to Ecuadorian daily El Telégrafo. These conditions fueled mistrust regarding the fairness and transparency of the agreement.
Arbitration and its consequences
On September 19, 2025, the arbitration tribunal of the Arbitration and Conciliation Center of the Bogotá Chamber of Commerce dismissed CRBC’s claim for more than $40 million plus interest and, crucially, declared the contract null and void, the Attorney General’s Office indicated.
CRBC had initiated the lawsuit in February 2019, alleging breach of contract after the municipality suspended the project. The city government cited various issues, including technical irregularities, inadequate financial guarantees, and construction delays, Primicias reported.
Local sources also observed that the company attempted to transfer losses resulting from its failure to perform to the Ecuadorian state — a pattern seen in other lawsuits involving Chinese firms. El Telégrafo reported that contracts often include clauses that heavily favor the Chinese companies and use international arbitration mechanisms to protect their interests.
Regional perspective and precedents
Sergio Cesarin, coordinator of the Center for Studies on Asia, the Pacific, and India at the National University of Tres de Febrero in Argentina, told Diálogo that the arbitration award shows that the Chinese investment model generates substantial friction in Latin America. “There are disagreements, contractual gaps, and problematic experiences arising from Chinese investments in Latin America,” he said.
The academic recalled that this is not the region’s first conflict with a Chinese company. The Coca Codo Sinclair hydroelectric project similarly pitted Ecuador against Sinohydro, a subsidiary of PowerChina.
In 2021, the Ecuadorian Electricity Corporation sued Sinohydro for structural defects, including more than 17,000 cracks in the turbine distributors. After an international arbitration process, both parties reached a settlement agreement in July 2025 to define a repair plan, Primicias reported.
Cesarin points out that large Chinese state-owned corporations typically avoid international arbitration proceedings and prefer to negotiate directly, without ceding jurisdiction to third parties. “In cases where there are contractual disputes, litigation is usually resolved in courts established in Beijing, which favors their own interests,” he said.
This approach, he said, creates a structural imbalance in dispute resolution mechanisms, as “it always involves an element of diplomatic pressure, given China’s unconditional support for its companies and the asymmetry of power with the host states.”
Disputes over lithium and international arbitration
The scope of litigation with Chinese companies extends beyond Ecuador. In June 2024, the Chinese company Ganfeng Lithium and two of its subsidiaries initiated international arbitration before the World Bank’s International Centre for Settlement of Investment Disputes (ICSID). This action followed Mexico’s 2022 reform that canceled lithium concessions in Sonora, granting the Mexican state exclusive control over the resource.
The dispute arose after Ganfeng acquired Bacanora Lithium in 2021 for a project valued at $800 million. While the company alleges that the cancellation harmed its investments, the Mexican government is defending its sovereignty, according to specialized news site Minería en Línea.
A similar case was set when Chinese investor Tza Yap Shum sued Peru before the ICSID in 2007 for the indirect expropriation of his fishmeal export company; the tribunal ruled in favor of the investor in 2011.
Impact on the Belt and Road Initiative
These conflicts have had repercussions on Latin America’s perception of the Belt and Road Initiative (BRI). For Cesarin, “there has been a process of erosion in trust toward China for some time.”
He explains that the initial momentum of BRI projects in Latin America has slowed in recent years, and that the Chinese narrative has lost strength in the region. “Many countries, such as Argentina and Colombia, joined the initiative with high expectations, but in practice there has been a pause and a decline in the relevance of infrastructure projects under the BRI framework,” he adds.
However, he points out that the BRI encompasses more than just land-based projects, as demonstrated by the strategic importance of the maritime port of Chancay in Peru.
Lessons and warnings for Latin America
The recent ruling in Ecuador delivers an important message to governments in the region. “It’s possible to litigate and win against Chinese corporations,” Cesarin emphasizes.
This experience, he says, “should serve as a warning so that, in future negotiations, countries incorporate clauses that guarantee compliance with contracts and contemplate the possibility of resorting to South American courts in case of non-compliance.”
Recent litigation thus underscores the need to strengthen national interests and monitoring mechanisms when negotiating complex deals with Chinese corporations and the unique risks they introduce.
