In 1863, during the height of the American Civil War, the British barque Springbok was intercepted by the USS Sonoma while sailing toward Nassau, a port in the neutral British Bahamas. The vessel’s manifest listed a cargo of textiles, boots, and saltpeter, goods that were commercially standard and bound for a neutral jurisdiction. Under the strict letter of maritime law at the time, trade between neutral ports was protected. Yet, the U.S. Supreme Court eventually condemned the cargo. The court reasoned that while the ship would unload in Nassau, the cargo was meant to be transshipped to a blockade-runner and smuggled into the Confederate states.

This judgment established the doctrine of “Continuous Voyage” (or “Ultimate Destination”): the principle that the legality of a shipment is determined not by the initial port of discharge, but by the ultimate intent of the goods. The voyage was deemed “continuous” despite the stopover, and the neutral port provided no sanctuary if it was merely a waypoint for contraband.

Decades later, during World War I, the British Prize Court expanded this doctrine in the case of The Kim (1915). Authorities seized American cargoes of lard and wheat bound for Copenhagen, a neutral port, on the statistical inference that the volume of goods vastly exceeded Danish consumption requirements. The precedent was set: the legal “voyage” ignores the physical itinerary and follows the goods to their final end-user.

Today, physical naval blockades have largely been replaced by regulatory architectures, export controls, sanctions, and entity lists. However, the ghost of the Springbok haunts the modern semiconductor and high-tech supply chain. The logic of “Continuous Voyage” has been digitized, shifting the burden of enforcement from naval captains to corporate compliance officers, creating a volatile new arena for private commercial disputes.

The Modern Pivot: From Ports to Proxies

In the modern high-tech economy, the “neutral port” is no longer a physical harbor like Nassau or Rotterdam. Instead, it is a Distributor or a Trading House located in a jurisdiction that is politically non-aligned or legally distinct from sanctioned territories. The “contraband” is no longer boots or salt, but dual-use integrated circuits, semiconductor manufacturing equipment, and encryption software.

The regulatory expectation today mirrors the 19th-century doctrine: authorities disregard the invoice address. If a supplier in Country A ships advanced processors to a distributor in Country B, and those processors are likely to be re-exported to a restricted entity in Country C, the trade is viewed as a direct violation by the supplier. The voyage is continuous.

The critical difference, however, lies in execution. In 1863, the state enforced the blockade. In the 2020s, the state has deputized the private sector. Manufacturers are required to look past their contractual counterparty and assess the “ultimate destination.” This deputization has sparked a wave of Business-to-Business (B2B) friction that is increasingly ending in international arbitration.

The Private Sector Conflict

The core of the modern dispute is not between a government and a company, but between a Supplier (seeking compliance) and a Distributor (seeking performance).

Consider a common scenario: A Supplier of high-tech components enters a long-term framework agreement with a Distributor in a neutral third country. Mid-contract, geopolitical tensions rise, and export controls are tightened. The Supplier’s internal compliance software flags the Distributor’s jurisdiction as a high-risk transshipment hub. Fearing strict liability or loss of export privileges, the Supplier suspends shipments, citing “suspected diversion.”

The Distributor, however, declares a Breach of Contract. They argue that they are a legitimate business, the goods are for local civilian use, and the Supplier is reacting to paranoia rather than law. The Distributor initiates arbitration, seeking damages for lost profits and reputational harm.

Here, the Supplier is trapped in a pincer movement. If they ship, they risk existential regulatory penalties from their home government. If they refuse to ship without concrete proof of diversion, they face millions in damages for breach of contract.

Legal Analysis in Arbitration: The Burden of Proof

When these disputes reach an arbitral tribunal, the central legal battleground is the burden of proof and the definition of “Force Majeure” or “Illegality.”

The Distributor typically argues that a contract can only be voided by actual illegality. They assert that unless the government has specifically listed them as a sanctioned entity, the Supplier has no right to withhold performance. From this perspective, the Supplier’s refusal is a voluntary business decision to de-risk, not a legal necessity.

The Supplier, invoking the spirit of “Continuous Voyage,” argues that the risk of diversion creates a constructive illegality. They assert that modern compliance standards require “Know Your Customer” (KYC) diligence that goes beyond government lists. If a Supplier ignores “Red Flags”, such as a Distributor ordering volumes inconsistent with local demand (echoing the lard statistics of The Kim), they can be held liable.

This creates a complex question for arbitrators: Is reasonable suspicion enough?

If a tribunal demands “concrete evidence” that goods will be diverted, the Supplier will almost always lose. Proving a future negative, or proving the intent of a third party three steps down the supply chain, is nearly impossible without subpoena powers the private sector lacks. However, if the tribunal accepts “reasonable suspicion” as a valid ground for Force Majeure, it grants Suppliers immense power to unilaterally void contracts based on internal risk appetites, potentially destabilizing global trade reliability.

Furthermore, the role of the End-User Certificate (EUC) is under scrutiny. Historically, an EUC signed by the buyer was a shield, a document the Supplier could rely on to prove good faith. In the modern era of “Continuous Voyage,” the EUC is increasingly viewed as a “rebuttable presumption.” Tribunals are asking whether the Supplier should have known the EUC was merely a paper promise. Did the Supplier conduct due diligence, or did they willfully ignore the reality of the trade route?

Conclusion: The “Reasonableness” Standard

The revival of the “Continuous Voyage” doctrine in the form of digital supply chain controls suggests that the era of simplified global trade is over. For legal practitioners and corporate officers, the takeaway is twofold.

First, standard “Force Majeure” and “Compliance with Laws” clauses are no longer sufficient. Contracts must now include specific “Sanctions and Export Control” clauses that explicitly grant the Supplier the right to suspend or terminate performance based on reasonable internal assessment of risk, not just upon a final government ruling.

Second, the outcome of future arbitrations will likely hinge on the concept of “abuse of right.” Tribunals will look for a balance: Did the Supplier act in good faith to comply with complex regulations, or did they use regulatory ambiguity as a convenient excuse to exit a commercially unfavorable contract?

Just as the Springbok case forced maritime law to look beyond the immediate horizon, modern high-tech trade requires companies to look beyond the immediate invoice. The voyage is continuous, and so is the liability.