The first agreement, signed on 14 September 1937, included plans to counterattack aggressive submarines. Naval patrols were established; the United Kingdom and France were to patrol most of the western Mediterranean and parts of the east, and the other signatories were to patrol their own waters. Italy was to be allowed to join the agreement and patrol the Tyrrhenian Sea if it wished. A second agreement followed three days later, applying similar provisions to surface ships. Italy and Germany did not attend, although the former took up naval patrols in November. In marked contrast to the actions of the Non-Intervention Committee and the League of Nations, this conference succeeded in preventing attacks by submarines.
The Non-Intervention Committee, a group of twenty-four nations set up in 1936 and based in London, had attempted to restrict the flow of weapons to the parties of the Spanish Civil War. For the United Kingdom, it formed part of the policy of appeasement towards Germany and Italy and aimed at preventing a proxy war – with Italy and Germany supporting Franco's Nationalist Coalition on one side and the Soviet Union supporting the Republican faction on the other – from escalating into a major pan-European conflict. An Anglo-Italian "Gentleman's Agreement" had been signed on 2 January 1937, with each party respecting the rights of the other in the Mediterranean and aimed at improving Anglo-Italian relations. In May 1937, Neville Chamberlain succeeded Stanley Baldwin as British Prime Minister, and adopted a new policy of dealing directly with Germany and Italy. The British believed they could convince Italy to abandon Germany through appeasement.
Under a Non-Intervention Committee plan, neutral observers were posted to Spanish ports and borders. The plan also assigned zones of patrol to the United Kingdom, France, Germany and Italy, and patrols began in April. Following attacks on the German cruiser Leipzig on 15 and 18 June, Germany and Italy withdrew from the patrols. The United Kingdom and France offered to replace Germany and Italy in patrols of their sections, but the latter powers believed these patrols would be too partial. The British Admiralty proposed four plans in response to attacks on British shipping, favouring sending significant naval resources to the Mediterranean as the best solution; previous control measures had been widely evaded. As suspected by the other powers, Italy was behind some of these attacks. Whilst officially being at peace, the Italian leadership had ordered the commencement of unrestricted submarine warfare, referred to in discussion as a campaign of piracy without mention of Italy. These plans would be the basis for a Mediterranean meeting, suggested by French Foreign Minister Yvon Delbos. Meanwhile, on the night of 31 August to 1 September, the Italian submarine Iride unsuccessfully attacked the British destroyer Havock with torpedoes, between the Gulf of Valencia and the Balearic Islands, strengthening British Foreign Secretary Anthony Eden's sceptical stance towards Italy. The attack led the British representative in Rome to protest to the Italian Minister of Foreign Affairs, but without response.
Up to 60,000 Italian volunteers were now operating in Spain, and the removal of foreign nationals was discussed by the Non-Intervention Committee. Italy had made a declaration that it would stop Italian volunteers from fighting in Spain on 7 January 1937, and put a moratorium on volunteers on 20 January, also agreeing to support limitations on the number of volunteers on the 25th. Italy continued to request that belligerent rights be given to the Nationalists and Republicans, so both would gain the right to search vessels for contraband, thus removing the need for naval patrols. This request was opposed by the United Kingdom, France and the Soviet Union. British recognition of Italian sovereignty over Abyssinia following the Second Italo-Abyssinian War was an important issue during Anglo-Italian discussions in August 1937. Following Eden's disagreement with Chamberlain and Lord Halifax, Leader of the House of Lords and influential politician, over the issue, any agreement recognising Italian sovereignty was postponed until after the planned shipping conference had taken place.
On 5 or 6 September, the British arranged a conference for all parties with a Mediterranean coastline, along with Germany. The conference was to be held at Nyon, Switzerland – Geneva was avoided because Italians associated it with the actions of the League of Nations over the Abyssinian Crisis. The United Kingdom agreed to France's request to extend an invitation to the Soviet Union, but blocked France's attempt to invite a representative from Republican Spain. Portugal expressed surprise at not being invited. Camille Chautemps, the new French Prime Minister, opposed direct intervention on the Spanish question. The Soviet Union accepted the invitation, indicating that it would use the opportunity to blame Italy for the attacks on shipping. The Soviet government formally accused the Italians of sinking two Soviet merchant vessels, the Timiryazev and the Blagoev, an accusation the Italians described as "aggressive and offensive". This was perhaps an attempt by the Soviet Union to push Italy and Germany away from the conference. Germany rejected the invitation, stating that piracy and other issues the conference was to discuss should be handled only by normal meetings of the Non-Intervention Committee, not a conference like Nyon. The United Kingdom and France rejected this suggestion, and continued to prepare for the conference. Soon after, the Italians similarly declined. The Non-Intervention Committee, it said, also had the advantage of including other European powers, notably Poland and Portugal.