Matrix Games Forums

If you capture another country's fleet you can upgrade your new ships with their upgrades. WAD?

Do you mean individual ship upgrades?  That is purely morale dependant and while those vary by costs a bit between nations, they are not restricted to nations.
 
However, you may have brought up an interesting side-affect.  Are you seeing the morale in the captured ship higher than the morale in your current ships?    So you in essence are getting to see upgrades that you don't have before because your other ships morale is too low.  That would be ... unusual.

not sure here, ships that are captured, take on the low morale of the boarding crew (captured after battle, they still get a boarding crew)

I have seen enemy ships keep the upgrades they had, but not seen them able to gain new ones

not sure what is meant, need more details

I don't see anything different with the fleets I have captured, the thing may be, that if you got ships with the fleet, then they may have higher morale then you are used to, and can get to the next level of upgrades

Oh sorry forgot to say how I captured them. Blockade!
I captured a province I had been blockading and the enemy ships in port became mine. All of the sudden I could give my newly owned enemy ships special abilities that I could not give my own ships...

Special abilities are morale dependent, so if the newly obtained ships had a higher morale, then it's possible that they had a wider variety of choices.

Captured ships would have their crews come from the capturing Navy I would think it would be more appropriate for their morale to be based somehow on the average morale of the capturing Navy.