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When two Navys enter a SeaZone I noticed this with the OE and combined AH navy... my French engaged the OE and not the AH

Although the size of my French Navy would've taken both on... It took another turn to then seperately engage the AH

Is this sound right?

That is correct - fleets from different nations never fight in the same battle.

Given flag signals was used as prime navy battle communication during WW1 I think that would not have been practicable in a large scale fleet engagement.