After the British counterattack at Arras, the LSSAH, along with the "SS-Verfügungs-Division", were moved to hold the perimeter around Dunkirk and reduce the size of the pocket containing the encircled British Expeditionary Force and French forces. The LSSAH took up a position 15 miles south west of Dunkirk along the line of the Aa Canal, facing the Allied defensive line near Watten. That night the OKW ordered the advance to halt, with the British Expeditionary Force trapped. The LSSAH paused for the night. However, on the following day of 25 May, in defiance of Hitler's orders, Dietrich ordered his 3rd battalion to cross the canal and take the Wattenberg Heights beyond, where British artillery observers were putting the regiment at risk. They assaulted the heights and drove the observers off. Instead of being censured for his act of defiance, Dietrich was awarded the Knight's Cross of the Iron Cross.