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4. One of the problems with “stock” SH4 is the way it treats the “detection” of neutral shipping (i.e. it basically ignores them). This behavior became unacceptable from a gameplay point of view during the development of the early war combat operations. Therefore there are “no neutrals” in OM. It will be up to the player to determine if a ship needs to be engaged or not. During the early phases of the war these normally neutral ships will remain unarmed. Also from review of the records, Uboat captains sink supposed “neutrals” during their early combat patrols
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Taken from the OM thread. Creator's words.
I either sink it, or let it go. If I let it go it means it's an ally.