Well, in the classic edition it was not allowed to share seazones, so if UK put a sub in the Med and another one in the North Sea, then Germany was denied building ships for the rest of that game. Not a fun rule. Ships must be allowed to share seazones in some way. Maybe a search roll like they have in other games. A seazone is always neutral, its not contestet, hostile nor friendly, just neutral. And if you want to attack other ships in that specific seazone, you will have to roll a search dice. Of course the other guy can roll a dice too, and if he win the search then he can sail away and escape battle.
As for defenders retreat, yes. The retreat is a battle tactic that armies and fleets use to get out of harms way so they can fight another day. In Russia they even scorch the earth when retreating, so the attacking Huns will not find food there. And for the naval battle, that is true maneuver warfare, ships don’t really retreat they just sail to a better position, in order to make the big T. In game terms, that is another seazone.