In March 1917, Captain Hardt (Conrad Veidt), a World War I German U-boat commander, is ordered to lead a mission to attack the British Fleet at Scapa Flow, rendezvousing at the Old Man of Hoy. He sneaks ashore on the Orkney Islands to meet his contact, Fräulein Tiel (Valerie Hobson). Tiel has taken over the identity of a new local schoolteacher, Miss Anne Burnett (June Duprez), who German agents had intercepted en route to the island. Hardt finds himself attracted to her, but Tiel shows no interest. The Germans are aided by a disgraced Royal Navy officer, the former Commander Ashington (Sebastian Shaw) who, according to Tiel, has agreed to aid the Germans after losing his command due to drunkenness, and Tiel implies that she has slept with Ashington to obtain his cooperation.