Many people have different ideas about this but many people i have seen posting here agree its not perfect.
Here is my proposed suggestion on how it should be.
If battles get interrupted by ships not involved or basically if you enter a battle and its an alliance server just waiting for invaders, its not very fun for the invader.
The best way to make this fun is to keep it fair. Afterall we enter this to fight, not be be unfairly slaughtered.
Rare even envisioned fair fighting as they even have solo sloopers pairing up with solo sloopers!
So heres the way i believe it would work well…
Hourglass of fate battle area can be entered by other ships but if you are not part of the battle you will take danage just like if you sailed off the map!
Because of this however that means these areas will need to be away from outposts and only available in the open water which really is where you would expect most of these battles anyway.
If you are in an alliance server and have selected to battle and you are in close proximity you will only be invaded by other alliance players. Numbers arent fairly balanced so take as many ships as you think you will need as the rest is up to you!
If alliance ships go over the total of ships available in a server then the entire alliance will be migrated to a seperate wordspace to accommodate the battle and then merge the winners and losers back, attempting to return to the original server of instance however if it cant it will place them all in a server with room.