From a completely outsider point of view, reading these cases to get a sense of BM. I would like to point out what I see from all the back and forth.
1. Mostly the case comes down to this, why was this rule even put in place? Answer, Because the two healthy realms of Rines and Irombro (healthy and equal) joined with Riombara in a war against another Realm - strategic move.
I think that the equal part is the most important part of the law, and not whether Rulers decided or Lords decided. If you think about the difference of 2 equal realms merging, as opposed to 2 unequal realms merging - Rulers or Lords deciding on a merger only makes a difference to the strategic fairness and balance of things, if the realms are of equal value and will ensure that the newly formed realm will in turn kick their enemies arses/win something.
In this case, the situation between Terran and D'hara, is not against the spirit of this law.
2. In the spirit of rule making on BM, whose main clause seems to be 'fight till its no longer fun', for one side or the other.
Regardless of where they switched too, making a ruling in this case in favor of punishing either Terran or D'hara, will force every single Noble to have to fight to the bitter end. This should be an unacceptable decision on the Magistrates part.
3. The question on 'well then, what makes it a merger that breaks this law?' Answer: each case will be unique, and the answer will lie in the case, not in trying to put in all possible scenario's, now. I think the first two points above should be looked at, when judging any realm merger case.
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All other arguments, are as nothing to those first 2 very important things stated above. Which looks at why the rule was made, and what precedent that set, and it looks at whether their ruling will impact on the game viability.
Terran being friends, machinating, etc, is mostly hearsay and inter-player argument, which pulls apart the rule word by word, and does not focus as it should, on the spirit and reason for the rule in the first place, and whether Terran meets those same reasons. Which if looked at, in that sense, it does not.