The United States v. Schooner Peggy was a landmark Supreme Court case in which the court established its authority to review decisions of state courts and interpret federal law. The dispute arose when Spanish authorities seized an American vessel, the Schooner Peggy, for alleged violations of Spanish customs regulations while it was docked in Havana Harbor. After being released by Spain, the ship's owners sued for damages in Maryland state court on grounds that their rights had been violated under both U.S. and international law; however, they were denied relief due to lack of jurisdiction over foreign governments or vessels outside U.S waters at that time. On appeal to the Supreme Court, Chief Justice John Marshall ruled that although states did not have jurisdiction over foreign nations or vessels beyond their borders, Congress could pass laws granting such power as part of its constitutional authority to regulate commerce with other countries—a ruling which has since become known as "the doctrine of implied powers." This decision marked a major milestone in establishing judicial review and defining congressional powers under Article I Section 8 Clause 3 (the Commerce Clause) of the Constitution

In United States v. Schooner Peggy, the Supreme Court held that a Spanish vessel had been lawfully seized by an American privateer during wartime and was subject to condemnation in federal court. Justice Samuel Chase dissented from this opinion, arguing that the seizure of the vessel violated international law because it occurred after peace had been declared between Spain and America. He argued that even if war existed at the time of capture, there were no orders or authority given for such a seizure; thus, he concluded that it was illegal under both domestic and international law. Furthermore, he noted that since Congress did not authorize any seizures after peace was declared with Spain in 1783 until 1801 when hostilities resumed between them again, then all captures made during this period should be considered invalid as well.