Officers from a Spanish SVA vessel boarded a port tender vessel last night, within Gibraltar waters, and restrained a member of its crew.
This followed a chase which also took place within Gibraltar waters.
Gibraltar customs officers, and then the Defence Police, also boarded the vessel to assist its crew. After half an hour, the SVA officers withdrew.
The Gibraltar Government has condemned the incident, describing it as 'illegal executive action'
The UK Government will be making a formal protest to Madrid.
The incident kicked off at around 10.30 at night.
The "Ultimate Predator", a UK flagged vessel which has been assisting the Port in the oil spill clean up in recent days, had been travelling without navigational lights and without its Automatic Identification System flagging its location, arousing Customs suspicion.
However, Customs says it's satisfied that the vessel crew were carrying out a legitimate crew transfer, and that its systems had malfunctioned.
But the Spanish Servicio de Vigilancia Aduanera vessel 'Aguila 2' chased the 'Ultimate Predator',.The UK vessel was boarded by crew from the SVA vessel, and One of the crew of Ultimate Predator was physically restrained by an SVA officer.
Gibraltar Customs also boarded the Ultimate Predator vessel, and a discussion began.
After half an hour, the SVA officers withdrew, and the Aguila 2 left Gibraltar waters.
There were no reports of injuries or rubber bullets being fired during the incident.
Chief Minister, Fabian Picardo, says the Spanish crew's actions are illegal and unacceptable. He says the Spanish officers in question have potentially committed offences against Gibraltar law and he has asked that the matter must be forcefully raised with Spain.
Mr Picardo says he wants cooperation and coordination, especially in the fight against crime, but that cannot be ushered in by illegal actions with officers out of their jurisdiction
He says these actions damage cooperation between law enforcement colleagues, as well as creating even deeper suspicion in the wider population about the attitude of some sectors of Spanish law enforcement to Gibraltar.