Sky Sports News reports that the two clubs have been in dispute for several months and have failed to come to an amicable solution.
The Premier League even instigated a mediation meeting last month to try and resolve the issue, but to no avail.
Now Watford have decided to take the issue further, which may force the Premier League to take the issue into their own hands.
If a Premier League commission finds in Watford’s favour they could, in theory, issue Everton with a points deduction. However, Sky Sports News reports that they are more likely to set a compensation figure for Everton to pay.
The Hornets claim Silva was repeatedly unsettled by Everton’s attempts to lure him to Goodison Park last autumn.
The Toffees were willing to pay up to £12m for the Portuguese, who was also keen on a move to Merseyside.
Silva was also reported to have spoken to key players he wanted to bring to Goodison Park with him, such was his desire to move.
Everton eventually admitted defeat in their pursuit and ended up appointing Sam Allardyce.
Watford meanwhile dramatically lost form and Silva was sacked in January, with the club publicly blaming Everton for his dismissal.
It seems awfully petty from Watford given their tendency to hire and fire managers with alarming regularity.
The club have gone through eight managers in just four years and 11 over the last seven, which suggests they hardly see them as a valuable commodity. So to suddenly get all protective is more than a little odd.
With Everton targeting Silva once more to replace Allardyce, the dispute seems to have come to a head.