In the spring of 1918, a German U-boat stops a Dutch freighter on its way to Stockholm, Sweden during the final year of World War I. The Germans board the ship, identify one man as a Belgian spy, and take him prisoner. One of the passengers questioned is an attractive Swissdress shop owner named Madeleine Goddard who is returning to Stockholm from a business trip to Paris, where she purchased dresses for her boutique. After returning to Stockholm, Madeleine, who is a German spy, meets with her contacts and provides information on Allied troop movements she acquired in Paris. The information is cleverly concealed in the gowns she purchased. While the Germans believe that she is one of their top spies, Madeleine is in fact a French double agent working to uncover the identity of the new German secret service leader in Stockholm. Soon after, a German war veteran named Baron Karl Von Marwitz enters Sweden. He claims to have left the German Navy because of war injuries, but some of his former colleagues believe he is a deserter. One night, Madeleine goes to a nightclub accompanied by her friend, English secret service agent Bob Carter. She notices Von Marwitz playing a bar room game predicting what girls will say after he kisses them. After she exposes the trick, Von Marwitz becomes intrigued by Madeleine's beauty and cool demeanor. The next day he visits her shop with Lupita, the Brazilian socialite he tricked the previous evening. After the temperamental Lupita leaves, Von Marwitz begins asking Madeleine to go out with him. In the coming days, she continues to refuse his requests, even after he offers to purchase all the stock in her shop. When he finally gives up, she gives in and agrees to date him. Madeleine and Von Marwitz begin seeing each other socially, and despite their differences, they fall deeply in love. Von Marwitz even proposes marriage. Their whirlwind romance is interrupted one night when Madeleine's German co-conspirator, Anatole Bergen, is murdered. Madeleine meets with her German contacts who inform her that the recent information she provided proved disastrous for the German Army. She is ordered to return to Paris immediately and investigate her French contacts. When Madeleine reaches Paris, she is met by a high-ranking French official who presents her with the Médaille militaire for her brave service to her country. Despite her reluctance to continue her work in Stockholm, she is ordered to return. Back in Stockholm, Madeleine and Von Marwitz are reunited and she reveals that she knows he is the German secret service leader. In response, he reveals that he knows that she is in fact a French spy. Although relieved that they can finally speak honestly with each other, they acknowledge that their dream of a life together can never happen. Soon after, Madeleine turns to her friend Bob for protection, now that her true identity is known to the Germans. While Bob plans her escape from Stockholm and the Germans, Von Marwitz plans her capture and return to Germany. The next day, Bob arranges for Madeleine to be arrested by the Stockholm police, ruining Von Marwitz's plan to capture her quietly. After Madeleine is deported, her ship is stopped by a German U-boat in neutral waters. Von Marwitz boards the ship and arrests Madeleine for being a French spy. As they are being rowed from the ship to the U-boat, a British Q-ship approaches and engages the U-boat in battle, sinking the enemy vessel. Madeleine is taken aboard the Q-ship while von Marwitz is moved to a British destroyer. Her feelings of love unabated, Madeleine is assured that von Marwitz will not be shot, but instead will be detained until the end of the war. As von Marwitz is rowed away, Madeleine waves and calls out to him, "I'll be waiting."
Writing for The Spectator in 1937, Graham Greene gave the film a poor review, parodying Dante's warning with a warning for viewers to "Abandon life all ye who enter here" and asking readers what the film is about because it "certainly not life". Greene noted that director Saville is capable of good films, but claimed that this time he had been "defeated by the incredible naïvety of script".
