To put it another way, I think that there may be a confusion with superficial democratic trappings and a democracy. https://www.britannica.com/dictionary/trappings
I’d argue that it’s the Houses that have the superficial trappings of democracy, while actually being hereditary autocracies. Not trying to pick on your faction, but the FWL is a glaring example. Ostensibly, the FWL is a representative democracy through its parliament. But practically all the powers of that parliament — executive succession, military decisions, budget decisions, provincial autonomy — have been ceded to the Captain-General through a series a series of laws, including Resolution 288, the Internal Emergency Act of 3030, and the Addendum to Incorporation. The Lyran and Suns representative bodies similarly ceded all real power to the Archon and Prince even earlier in their history.
Contrast that with the Clans, where there is a functioning, voting council at the top of every caste and additional councils and assemblies practicing direct democracy at every level of Clan society over a whole range of decisions. If Khan X wants to go to war with Clan Y but Clan Council X does not, Clan Council X can vote Khan X’s proposal down (and further vote to remove that Khan from power as necessary). If Captain-General X wants to go to war with Successor State Y and the FWL Parliament disagrees, there’s little to nothing they can do to stop the Captain-General from going to war. They can’t enforce a vote opposing the operation in the first place, they can’t withdraw funding from the war, and they can’t remove the Captain-General from power.
BT is a universe of war. For the purposes of that universe, if a faction has a voting body that can start or stop a war, I’d argue that’s the measure of whether that faction has a functioning democracy. If a faction does not have a voting body that can start or stop a war, I’d argue that faction only has the trappings of democracy.
And again, BT fiction isn’t going to focus on parliamentary debates, lobbying congressional committees, and the like. C-SPAN is boring. Megalomaniacal warlords are not. But looking at how the governments are laid out and their workings in the sourcebooks, it’s clear that the Clans are intended to have functioning democracies while the Houses transferred those powers to hereditary autocracies a long time ago.
FWIW...