The U.S. Supreme Court case Watts, Watts & Company, Limited v. Unione Austriaca Di Navigazione & Co in 1918 revolved around a dispute over the delivery of goods during World War I. The British company, Watts, had contracted with the Austrian shipping company to deliver goods from India to Italy before Austria-Hungary entered into war against Britain and its allies. After the declaration of war and seizure of cargo by British authorities due to it being enemy property (Austrian), Watts sued for breach of contract as they were not paid for their services rendered prior to the outbreak of hostilities between Britain and Austria-Hungary. However, Unione Austriaca argued that since both companies became enemies after their countries declared war on each other; all contracts between them were automatically terminated under international law principles at that time which stated any contract made between citizens or corporations residing in belligerent nations would be considered nullified upon commencement of hostilities. The court ruled in favor of Unione Austriaca stating that although there was no specific clause about termination due to warfare within their agreement; such an event is implied within every commercial contract unless otherwise specified.

In the dissenting opinion for Watts, Watts & Company, Limited v. Unione Austriaca Di Navigazione & Co., Justice Holmes argued that the majority's decision to allow a British company to sue an Austrian company in American courts during World War I was incorrect. He believed that allowing such suits would interfere with the President’s ability to conduct foreign policy and could potentially lead to international conflict. Furthermore, he contended that it was inappropriate for U.S courts to adjudicate disputes between foreign entities when those disputes had no connection with America or its interests. The justice also expressed concern about how this ruling might affect future cases involving similar circumstances and warned against setting a precedent where U.S courts become arbiters of international conflicts without any direct involvement or stake in them.