In Illyriad as elsewhere, there are two ways to resolve a dispute: with recourse to law and/or justice, or by force of arms. I personally think that law/justice makes the game a more pleasant, welcoming, inclusive place to play, but whatever your view, there are serious problems with hoping that law/justice can be the basis of a community in Illyria.
In the real world, history has been an uneven progress from War to Law. (For examples, scroll to the bottom.) There have been setbacks but the trend is clear. Why should this be so? The reality is that Law has many advantages for a society.
First, societies ruled by law allow people to invest and reinvest, keeping the fruits of what they have built, without fear of random attack or expropriation. This allows those good at creating things (wealth, technology, etc.) to continue doing so. It also protects and nurtures more complex networks of trade, communication and investment – for example, allowing for the Industrial Revolution. Societies without Law deprive innovators of both incentive and opportunity to move the civilisation forward, and cannot protect the infrastructures required for more effective production and organisation.
This means that just societies tend to become stronger, and so able to gain the upper hand over fragmented societies (The US and China can gain huge advantages from exploiting the mineral wealth of relatively lawless swathes of Africa, but there is no chance of African kleptocracy or warlordism overwhelming China or the US.)
Second, people tend to want to live in societies where they are treated fairly. This means that where people have the option to move to a fairer society they sometimes will. And it means that populations will sometimes overthrow oppressive rulers, as in the Arab Spring (though without a guarantee that the replacement will be better – as the French Revolution illustrates), so creating a tendency to fairer governments.
Neither if these are relevant in Illyriad.
First, there is no progress (economic, technological, etc.) which accrues in Illyriad based on how Illyria’s society organises itself. There is no 17th Century Agricultural Revolution, 19th Century Industrial Revolution or 21st Century Silicon Valley that can be built if society evolves beyond feuding – because Illyriad has no rules for such evolution. However, as War can be used to seize resources and eliminate rivals or irritations, War provides advantages to those who employ warfare effectively.
Second, there is no way for the subjects to rebel. The Illyrian version of the American Revolution would simply involve the British saying “how many cities have they built? None? Well, who cares!” and going back to squabbling with the French. No Illyrian King James II would be captured by Kentish fishermen. No Illyrian Hosni Mubarak would have to worry about his commanders and enforcers deserting or disobeying him. Only those with more effective coercive machinery can unthrone one another – in other words, only War can overthrow a warlord in Illyria. All a disgruntled subject can do is quit the game – which reduce the numbers playing without actually changing anything.
But lastly, the real killer is this: Law is a lot of effort. In the real world, religions and philosophers have spent thousands of years trying to bend society towards justice. (“Do unto others as you would have them do to you.” “Render back the trusts to those to whom they are due; and when you judge between men, judge with justice.” etc.) And whole institutions have been built, from police forces to prisons, to attempt to enforce justice. In Illyriad, however, it is an immense and often futile effort to try to work out the justice of even grand political events, and for small events (actually, for most large events, too) there is usually nothing more than two grumpy players shouting at each other, and no real ability to investigate objectively.
Faced with the difficulty of attempting to deal fairly with people, it is tempting for players to just take the easy option – and human beings like easy options, especially in something which they do voluntarily, for fun, like playing a game. And which is easier – sending an email / IGM saying “lets talk about this”, or clicking a single button to send an army?