In 1940 Europe 2nd Ed. manual. Pg. 15, in the “Powers Not At War With One Another” sidebar:
“If a power at war attacks a sea zone containing units belonging to both a power with which it’s already at war and a power with which it’s not at war, the latter power’s units are ignored. Those units won’t participate in the battle in any way, and a state of war with that power will not result.”