The dispute broke out after Gibraltar's construction of an artificial reef using concrete blocks in the bay off the tiny territory. Gibraltarian authorities say the move was necessary to help marine life recover from overfishing.
Spanish fishermen counter that it hampers their access to certain waters. Spain, in turn, has toughened its border checks, leading to long queues for workers and tourists entering Gibraltar.
While Spain has threatened to take its claim on Gibraltar to the United Nations, Britain last week called on the Commission, the European Union's executive, to send in monitors to check whether Spain's controls breach EU rules.
On Monday (19 August), as British warships arrived in Gibraltar on a previously scheduled, routine port of call, Commission President José Manuel Barroso and Spanish Prime Minister Mariano Rajoy spoke by telephone.
"They agreed that a Commission fact-finding mission should as soon as possible examine in loco the border control, movement of people and goods questions," a Commission statement said.
"President Barroso expressed his hope that Spain and the UK will address these matters in a way that is in line with their common membership in the EU."
The British Foreign Office declined to comment.
Matter of interpretation
A Commission official, who asked not to be named, said Spain is entitled to carry out border checks but these must be proportionate - a definition open to interpretation and that is what the fact-finders will investigate.
Britain, and therefore Gibraltar, is not a member of the Schengen open border agreement between many EU states. Spain is a Schengen participant.
Although British, Spanish and Gibraltarian authorities have said the navy's arrival at the British overseas territory was long scheduled, some in Spain regarded it as provocative.
At about 10 a.m. (0800 GMT), the frigate HMS Westminster sailed into the port of Gibraltar flanked by two smaller ships.
It was followed an hour later by the auxiliary ship Lyme Bay, part of a task force of four warships and five other vessels that left Portsmouth and Plymouth about a week before for exercises in the Mediterranean and the Gulf with various allies.
Spain lays claim to the territory, with a population of just 30,000, which it ceded to Britain by treaty 300 years ago.
As well as tightening border controls, Spain has threatened to charge tourists a €50 euro border levy, restrict the use of Spanish air space or block Gibraltar's lucrative ship fuelling business.
‘Illegal’ tax
Commission spokesperson Olivier Bailly said any tax or fees to pass an EU border was illegal under EU law. He also said that the Commission was of the opinion that the UK and Spain, two EU members, should “talk to each other” to solve any outstanding issue.
In the German newspaper Süddeutsche Zeitung on Monday, Gibraltar Chief Minister Fabian Picardo accused the Spanish government of creating conflict to distract attention from corruption allegations against the ruling People's Party.
"In the 19th century, gunboats were used to do politics. Today our aim is to improve the living conditions of our citizens by means of cooperation," Picardo said.
"Unfortunately, Spanish politicians are currently bringing the situation to a head and therefore making things worse for their own citizens in the surrounding regions."
