diff --git a/x/gravity/keeper/batch.go b/x/gravity/keeper/batch.go
index b3ff9e2e2..e0cf1d6e5 100644
--- a/x/gravity/keeper/batch.go
+++ b/x/gravity/keeper/batch.go
@@ -82,7 +82,10 @@ func (k Keeper) BuildOutgoingTxBatch(ctx sdk.Context, contractAddress, feeReceiv
 
 // GetBatchTimeoutHeight This gets the batch timeout height in External blocks.
 func (k Keeper) GetBatchTimeoutHeight(ctx sdk.Context) (uint64, uint64) {
-	currentMeHeight := ctx.BlockHeight()
+	currentMeHeight := uint64(0)
+	if ctx.BlockHeight() > 0 {
+		currentMeHeight = uint64(ctx.BlockHeight())
+	}
 	params := k.GetParams(ctx)
 	if params.AverageExternalBlockTime == 0 {
 		return 0, 0
@@ -93,8 +96,11 @@ func (k Keeper) GetBatchTimeoutHeight(ctx sdk.Context) (uint64, uint64) {
 	if heights.ExternalBlockHeight == 0 {
 		return 0, 0
 	}
+	if currentMeHeight < heights.BlockHeight {
+		currentMeHeight = heights.BlockHeight
+	}
 	// we project how long it has been in milliseconds since the last Ethereum block height was observed
-	projectedMillis := (uint64(currentMeHeight) - heights.BlockHeight) * params.AverageBlockTime
+	projectedMillis := (currentMeHeight - heights.BlockHeight) * params.AverageBlockTime
 	// we convert that projection into the current Ethereum height using the average Ethereum block time in millis
 	projectedCurrentEthereumHeight := (projectedMillis / params.AverageExternalBlockTime) + heights.ExternalBlockHeight
 	// we convert our target time for block timeouts (lets say 12 hours) into a number of blocks to
diff --git a/x/gravity/keeper/batch_test.go b/x/gravity/keeper/batch_test.go
index ccdcd5c65..3f4365678 100644
--- a/x/gravity/keeper/batch_test.go
+++ b/x/gravity/keeper/batch_test.go
@@ -70,6 +70,22 @@ func (suite *KeeperTestSuite) TestLastPendingBatchRequestByAddr() {
 	}
 }
 
+func (suite *KeeperTestSuite) TestBatchTimeoutHeightDoesNotUnderflowWhenObservedLocalHeightAhead() {
+	suite.SetupTest()
+
+	suite.Ctx = suite.Ctx.WithBlockHeight(1)
+	suite.Keeper().SetLastObservedBlockHeight(suite.Ctx, 1_000, 100)
+
+	params := suite.Keeper().GetParams(suite.Ctx)
+	expectedBlocksToAdd := params.ExternalBatchTimeout / params.AverageExternalBlockTime
+
+	projectedHeight, batchTimeout := suite.Keeper().GetBatchTimeoutHeight(suite.Ctx)
+
+	suite.Require().Equal(uint64(1_000), projectedHeight)
+	suite.Require().Equal(uint64(1_000)+expectedBlocksToAdd, batchTimeout)
+	suite.Require().Less(batchTimeout, uint64(2_000_000))
+}
+
 func (suite *KeeperTestSuite) TestKeeper_DeleteBatchConfirm() {
 	tokenContract := helpers.GenerateAddress().Hex()
 	batch := &types.OutgoingTxBatch{