Based quite accurately on the first major naval engagement of WWII.
At the outbreak of war in 1939 the German heavy cruiser (a Panzerschiff or "pocket battleship") Admiral Graf Spee was already loose in the Atlantic and commenced commerce raiding, attacking unarmed merchant ships bringing food and other supplies to the besieged British Isles. Before heading for home waters Captain Langsdorff of the Graf Spee decides on one final raid on a convoy leaving from the River Plate in South America. But this move has been anticipated by Commodore Henry Harwood and his squadron of three Royal Navy cruisers Exeter, Ajax & Achilles.
The Graf Spee has the much heavier guns and the faster engines so despite explicit orders against engaging with any warships, Langsdorff decides to join battle, hoping to add the sinking of a Royal Navy cruiser to his other achievements. The Graf Spee should have blown the three cruisers out of the water before they landed a shot on her, or just ran away. But with superior tactics the Royal Navy ships do enough damage to the Graf Spee to force her to take refuge in Montevideo, Uruguay. One of the three cruisers, HMS Exeter, is so badly damaged that she limps off to the Falkland Islands to be repaired.
Then the diplomatic battle begins. The British want to keep the Graf Spee in Montevideo until enough forces can be mustered outside to attack and sink her. Various diplomatic tricks are used to keep the Graf Spee in the harbour while the two remaining cruisers patrol outside. But when it is clear that the Graf Spee is about to set sail, by a clever bit of deception the British convince the Germans that there is already a large Royal Navy force waiting for her and that the Graf Spee is doomed. Not wanting the ship to be captured they scuttle her in the River Plate.