This is actually too simple.When you burn up the 2 masts at the ends of the ship, go down and a cutscene will start.Then you will be in a fight with the dude who is the leader of the Spaniards.
I recommend you to use Will instead of Captain Jack Sparrow as the guy will mainly follow him. Hit the main guy once and he'll start following you. Take full advantage of the situation.Hit him by pressing X (quick attk) 3 times next to the pole.*Note* Make sure you hit the guy. He'll do his "Thousand spin strike". Move away as it causes a lot of damage. Do this around the pole.Repeat the process 5-6 times and Voila! The level is finished.....