During the Second Battle of Fondor, the tensions that had arisen between JCOS-1 Cha Niathal and JCOS-2 Jacen Solo finally came to public enmity. Both proceeded to relieve the other of command—Solo claiming his superiority of a Chief of State to a Supreme Commander and Niathal claiming hers as an Admiral to a Colonel.
Because Solo, now known as Darth Caedus, had retreated to Coruscant, he claimed the Galactic Capital and what remained of the Galactic Alliance as the sole Chief of State. Niathal, left with her fleet and a battle-scarred Fondor, and believing that she had no chance in a slugging match of fleets above Coruscant, declared an Alliance-in-exile with herself as its head, based at Fondor.
As the war concluded with the death of the Dark Lord, the Alliance-in-exile re-merged with the main body of the Galactic Alliance, now coming under new leadership in the upcoming election, ending its exile.