How can I tell if ships are neutral or not

[kapuhy]

Originally Posted by Jeff-Groves

I'd suspect the DefSide.Cfg is wrong.
Sweden remained Neutral during WWII aside from firing Anti-Air Craft guns on German planes flying over to attack Norway.

Not in this case. Vecko (and Gap if I recall this was also his work and ideas) made an effort to represent complicated neutrality rules by duplicating neutral nations. As such, there are two "Swedens" in game using the same flag: "true" Sweden that is neutral, abides by neutrality laws and player loses renown for attacking its ships, and "fake" Sweden used to represent ships breaking neutrality rules (weapons on board, no illumination, sailing in convoys or in areas prohibited to neutral traffic). The latter is treated by game as enemy nation and player gains renown for attacking its ships, despite neutral flag.

What jake4711 encountered was "fake Sweden" ship carrying contraband to England. What could be corrected in this case for more realism, is perhaps removing weapons in future TWoS updates from merchants that are in violation of neutrality rules but would not, realistically, be armed.