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.