Yes I accept I have been misreading it. However, I still think it is possible to create a casus belli from the seizure of a neutral ship.
Art. 17. Neutral vessels may not be captured for breach of blockade except within the area of operations of the warships detailed to render the blockade effective.
Art. 18. The blockading forces must not bar access to neutral ports or coasts.
Art. 19. Whatever may be the ulterior destination of a vessel or of her cargo, she cannot be captured for breach of blockade, if, at the moment, she is on her way to a non-blockaded port.
So, assume a British vessel is on its way to Jersey from Portsmouth, with goods prescribed as contraband if landed in France. Seizure of that ship by Germany would be illegal according to Art 19. If Germany extended the blockade to cover the Channel Isles, that would be illegal under Art 18.
Also, under Art 17, if Germany attempted to define the entire Channel outside British territorial waters as 'the area of operations', which militarily would make sense, that would place most of the South Coast merchant fleet and anything from the East Coast heading to say Spain or Portugal or further, at risk of being stopped and searched at best, and if some over-zealous German captain seized something important, could lead to a more serious incident. Even without an incident, interference with British shipping on any significant scale would not go down well. In the context of this scenario, British sympathies would probably still be with Belgium and France, so anything short of war that puts Germany in a bad light internationally would be pursued.
As I have already said this is a moot point, because both Britain and Germany ignored the Declaration anyway, and in the case of the ATL, after this discussion the scenario will be a bit different from the ones I posted above.