The peace treaty name is a  bit of a joke name ,as its nothing of the sort.

Its actual a force field shield, but only for the town.It does not protect you when you are on a tile.

For that you need a domain guard , and they can be hard to come by.

Returning to the town shield and it being a misconcieved name, beware of towns  with a peace shield teleporting near you, dropping the shield , attacking you , and reshielding.