"The Sea Tribe's declaration of war" eventually dissipated quietly following Ao Lian's return home and the mediation of the Tongtian Sect.
The main reason this incident was resolved peacefully was that none of the three parties actually wanted to go to war.
The Sea Tribe was outwardly strong but internally weak, with neglected military preparations, fearing their bluff would be called if a real fight broke out. Moreover, with Ao Lian returning, they had no reason to fight.
The treasury of the Great Liang Court was empty and could not support a large-scale war.
The Tongtian Sect's foundation in the Liang Kingdom faced challenges from the Taixu Sect and the Linlan Sect. Should they go to war with the Sea Tribe, they would be very vulnerable to the remaining Immortal Sects exploiting the situation to act against them, ending up in a thankless predicament.
After much ado about the declaration of war, the biggest loser was actually Tongtian Sect's Wuyue City branch.