IIRC an issue arose because the EEZ or something expanded and once again encompassed Sealand, when that happens the Germans could withdraw recognition. But if Sealand is further recognized as Soverign that's going to cut a decent chunk of EEZ away from the UK.
That is correct it happened in 1987, as I recall the day before the UK expanded it's EEZ Sealand expanded their EEZ. The normal way that overlapping EEZ claims are handled is for the mid point to be taken as the boundary. So ideally a situation where the UK recognizes Sealand as Sovereign should come about before 1987.
Another problem is that the United Nations Convention on the Law of the Sea (in force since 1994) which states in Part V, Article 60, that: 'Artificial islands, installations and structures do not possess the status of islands. They have no territorial sea of their own, and their presence does not affect the delimitation of the territorial sea, the exclusive economic zone or the continental shelf'. So ideally Sealand needs to gain widespread recognition as a Sovereign State before 1994 to predate the UNCLOS or butterfly away or change Article 60.
I'm going to bash out a rough time line
1967 2 September Founded.
1968 Border dispute with the UK shots fired.
UK Court rules UK has no jurisdiction over the Principality of Sealand.
1975 The Principality of Sealand adopts Constitution.
The Principality of Sealand introduces
national flag, a national anthem, a currency and passports.
1978 August Attempted Coup by self described Prime Minister of Sealand.
Federal Republic of Germany (West Germany) formally recognizes the Principality of Sealand as a Sovereign State and opens diplomatic relations.
Alexander Achenbach's passport is revoked, and he is handed over to West German custody.
1987 The Principality of Sealand expands it's EEZ to 12 nautical miles.
The UK expands it's EEZ to 12 nautical miles.
The Principality of Sealand purchases a secondhand armed patrol boat off West Germany
The United Kingdom of Great Britain and Northern Ireland formally recognizes the Principality of Sealand as a Sovereign State and opens diplomatic relations to resolve conflicting EEZ claims.
Negotiations between the Principality of Sealand, and the United Kingdom of Great Britain and Northern Ireland over EEZ's reach an agreement that the border between the two States EEZ's will be the point equal distance between the two. Also it is agreed that the United Kingdom of Great Britain and Northern Ireland will manage the Principality of Sealand's fisheries for an annual rental, and enforce it's laws in the EEZ of the Principality of Sealand on non citizens of the Principality of Sealand. The United Kingdom of Great Britain and Northern Ireland committed to not enter into any Treaties or other Agreements that threaten the Principality of Sealand's status as a Sovereign State.
1992 US Court finding (1990) that the Principality of Sealand was neither a state nor an entity capable of registering ships is overturned on appeal by the Principality of Sealand.
1994 The United Nations Convention on the Law of the Sea comes into force which states in Part V, Article 60, that: 'Artificial islands, installations and structures do not possess the status of islands except the Principality of Sealand.