If you guard a damaged privateer in your city, you have an open borders treaty signed, and a ship of your trading partner arrives at that city: your privateers docked in that city vanish!
I firstly thought this was a bug. But it seems to be a feature!
As privateers are 'hidden nationality' units, it makes sense that, if a foreign ship 'sees' the privateer in your city and calls the authorities, you have no other option than disband the unit to 'deny government involvement in piracy activities'
Also, I have noticed the old Civ 3 trick of guarding your privateers with a frigate in the same tile, doesn't work! It's logic, as 'friendly units' can occupy the same tile in Civ 4, and you can attack the enemy forces in that tile without declaring war on your friend.
Maybe the game should include also diplomatic penalties if an ally sees a privateer with your unit in the same spot or in your cities (-1 You support piracy! We already know...)
Anyway, I think it's good for game balance to force you to repair the damaged privateers at sea.

I firstly thought this was a bug. But it seems to be a feature!
As privateers are 'hidden nationality' units, it makes sense that, if a foreign ship 'sees' the privateer in your city and calls the authorities, you have no other option than disband the unit to 'deny government involvement in piracy activities'

Also, I have noticed the old Civ 3 trick of guarding your privateers with a frigate in the same tile, doesn't work! It's logic, as 'friendly units' can occupy the same tile in Civ 4, and you can attack the enemy forces in that tile without declaring war on your friend.
Maybe the game should include also diplomatic penalties if an ally sees a privateer with your unit in the same spot or in your cities (-1 You support piracy! We already know...)

Anyway, I think it's good for game balance to force you to repair the damaged privateers at sea.