I have two governments. One is ID 128 with a class set ot 1. Enemy is set to class 2. The second is ID 129 with class set to 2, enemy set to 1. Yet when I put them in the same system, they just fly around like nothing was wrong. The ships do have weapons and either Intercepter or Warship A.I.
Enemy govs friendly to each other?
Check the MaxOdds field. They might be afraid of attacking each other because they think they don't outgun the other enough. Other than that, I have no idea right now.