Played around a bit more with this game, trying to understand why this is occurring. The save posted below is from one turn before the AI surrender, they have 4 cities and are 2nd in Power rating. The Empire in question is Salamanthus, located in the Northeast. The faction leader, Salamanthus the Soulburner, appears to be stuck on a bandit camp, which he has not looted.
Utilising the teleport cheat, I moved him and several troops to one of the cities, and ...no surrender, leading me to believe that this behavior is influenced by the sovereign becoming unable to move from, or loot the bandit camp.
This game is 1.2 beta.
Hopefully, someone will have a suggestion or fix for this, not really ideal behavior, and definitely an immersion breaking issue.