Historically, merchant raiding was carried out mostly by privateers, under contract to their King/nation and with target's/enemies corresponding to their Nation/King's enemies. Privateering was most apparent during times of war -i'm not aware of their being letters of Marque (legitimising piracy) against traders with whom a state of war did not exist.

Ok, so this IS a wikipedia quote but... "Caribbean piracy arose out of, and mirrored on a smaller scale, the conflicts over trade and colonization among the rival European powers of the time, including the empires of Britain, Spain, the Netherlands, Portugal and France. Most of these pirates were of English, Dutch and French origin."

The advantage in game terms of donating fleets to the pirate faction would mean they could provide revenue from trade raiding while not at war with the trading nation. What would prevent the donated ships preying on your own trade though?

Perhaps it would be better to retain player control, such that the player could designate a fleet as pirates, affiliated with their nation, but fair game for any other faction -in a similar way as privateers in CIVIV can operate with impunity, but are also vulnerable to attack frmo anyone.