In the 1913 case Eastern Extension, Australasia and China Telegraph Company v. United States, the U.S. Supreme Court ruled in favor of the United States government over a dispute regarding telegraph cable damages caused by a U.S. Navy vessel during peacetime maneuvers near Manila Bay in 1905. The British-owned company sought compensation for their damaged undersea cables that were severed by an anchor from USS Manassas, arguing that international law required reparations for such incidents even if unintentional or accidental. However, the court held that while nations are generally liable for damage done to foreign property within their jurisdiction during peacetime, this principle did not extend to cases where damage was inflicted outside of national territory on objects lacking territorial status like submarine cables lying on high seas' bed.

In the dissenting opinion for Eastern Extension, Australasia and China Telegraph Company v. United States (1913), Justice Holmes argued that the majority's decision to award damages to a British company under U.S. law was incorrect because it failed to consider international comity principles. He believed that since the damage occurred in foreign waters, it should be governed by local laws rather than American ones. Furthermore, he contended that if an act is committed outside of U.S jurisdiction and does not violate any rights within its territory or on high seas where it has special interests, then such acts are beyond its control unless there is a treaty obligation or some other recognized ground of extraterritorial power. In this case, no such grounds existed; thus making application of domestic law inappropriate according to him.