Fish found in the east by the Spanish (3)
I believe the answer is:
'fish' is the definition.
(eel is a type of fish)
'east by the spanish' is the wordplay.
'east' becomes 'e' (abbreviation).
'by' means one lot of letters go next to another.
'the spanish' becomes 'el' ('the' in Spanish).
'found in the' acts as a link.
(Other definitions for eel that I've seen before include "Sea creature like conger" , "slipper" , "Teleost fish" , "Large elver" , "A sea snake" .)