Well, as I see it, the Corsair Empire is a nation comprised of thousands of factions, groups and families, all with different goals, methods and systems of order. There is no Corsair government, there are no governmental institutions, each faction or family has it's own infrastructure, including it's own means of keeping its people in check. The Council of Elders is simply the largest and most powerful factions gathered together, who rule by virtue of having more force to bring to bear than anyone that may oppose them.
As such, the Council of Elders only gets involved in affairs of state, such as making sure the fleets (all of which are owned, operated and commanded by separate factions or families) are predominantly focused on killing those who oppose the empire directly, and not ruining our diplomacy. The Council also conducts diplomacy on behalf of the majority of the empire (not that every Corsair will always agree with what is done). However, beyond that, it is up to the people themselves to sort out disputes and punish crimes, generally via violence, whether it be duels to resolve property ownership, torture and execution of criminals ('criminal' being a very loose term, applied to anyone that wrongs any group, whether innocent or in the right, or not), and simply killing all who oppose you.
This is how I see it, and why I think that the 'sairs are one of the few groups who can actually talk of 'honour' and not just be using it to try and coerce someone into fighting them, as honour would be pretty much the chief peace keeping force, besides force it's self, not that peace is the norm, and Corsairs probably kill more Corsairs than Outcasts do. Then again, Crete is vastly overpopulated, to the point where even with huge shipments of food coming from various groups, people still starve, and IIRC, the rough population estimate that the Council came up with was hundreds of millions, somewhere nearing a billion people, so we've got people to spare.
Basically, IMO the Corsair Empire is comprised of thousands of factions and groups, all of which can police who they see fit however they choose, and can make up laws as they see fit, so long as they have the firepower to enforce them, and as long as they don't interfere with Council affairs.