In my experience, faction battles can be quite short or extremely long (especially if you're playing solo.) Unfortunately, if you're unable to sink your opponent fast enough, you run the risk of having the battle get interrupted by another crew totally unrelated to the faction battle and join the fight. The appearance of another ship HEAVILY disrupts combat between the original two duelists and forces them to engage the new ship in combat before they can focus on their main target. If the intruding ship decides to take sides and only targets one specific ship (for example if a GOF brigantine intrudes to assist a dueling GOF sloop), the dueling SOTF sloop is FORCED to fight an unfair battle that they can't simply run from due to the Hourglass of Fate. It's extremely frustrating when you're on the receiving end of this (especially if you emerge to see your opponent is allied with other ships), and it doesn't feel earned whenever you "win" by pure happenstance. Since the faction battle's focus is to keep the fight as fair as possible, matching galleons with galleons, solo sloops with solo sloops, et cetera, it doesn't make sense to force these ships to fight uneven battles against their will.
I believe that the best way of fixing this issue is to give the dueling ships an escape option if they decide they can't handle another ship's sudden appearance. If an unrelated pirate or ship gets too close to the arena, it should warn both dueling crews and allow them to sail outside the arena and abandon the fight without being guaranteed to sink. If the dueling crews decide that it's not an issue, they can continue fighting like normal. However, if one of the crews decides that another ship approaching would put them at an extreme disadvantage, they can sail outside the circle to concede the fight to their opponent without sinking. The first ship to abandon the arena is considered the loser, but they won't explode and lose their treasure, supplies, hourglass value, or current win streak. The ship that stays to fight is considered the winner and will gain hourglass value and other rewards accordingly. To prevent server strain, the attackers will dive beneath the waves and appear in a new server once they leave the arena, or if they were the first to flee the battle. The defenders will be allowed to continue their intended business (albeit with a potential new enemy hot on their heels...)
This method would give crews who feel overwhelmed by an intruding ship the option to concede the battle without feeling like they were punished for bad luck, while also preventing the other duelist (who might have had the upper hand!) from feeling like they were robbed of a potential victory due to the circumstances.