The LDR were, technically, considered politically neutral in the General War. While at odds with the Lyran government, they never took up arms against them, or the "Coalition", with the "Alliance". They defended their territory against both Lyran and Hydran incursions. They still considered other Lyrans as brothers and when fights between them occured the victor would allow the defeated party to disengage, rather than destroy them.
The agreement/treaty with the Hydrans was to not allow the coalition to stage offensives against the Hydrans through LDR space or Lyran access to LDR facilities (bases, etc.), in return for Gatling tech and a mutual nonagression pact. They had no treaties or alliances with other "Alliance" members in the General War, if I recall my history correctly.
The ISC left them alone during their invasion. They considered them "pacified" enough. Their nutrality betrayed them during the Andro Invasion as they had no allies to come to their aid against them and were whiped out before they could try and seek help.