The Republic is for the most part
a peaceful place.
During
the course of the film, private armies are put into action, and then
illegalized. Palpatine (Darth Sidious) manipulates the course of
events,
apparently motivated by his lack of power. Ambitious, he - as a Sith -
seeks to depose the Jedi
Council. The first step is to try and stir up trouble.
The Senate primarily has the authority to regulate interplanetary
commerce, but also
intervenes in other matters. Slavery is illegal by Republic law, for
example, although legal in Hutt space.
Hutt space and other territories outside the Republic constitute a
lawless fringe; the Republic does not go out of its way to enforce any
kinds of standards out there, and - as a matter of fact - rarely acts
even within its own borders.