Free for all free-for-all
Kolkuzhn has long been a hub for pirate activity. Historically, anyone docking there was just as likely to lose all of their possessions as they were to make a surprise profit from the unclaimed loot of two pirate crews decimating each other in chaotic disagreement.
Chaos is a ladder
This all changed with the sudden appearance of Captain Bloodscale a few years back.
The undead, self-proclaimed pirate queen exploded onto the mercantile scene and quickly made a name for herself, thanks to the mix of her pratically unkillable undead status and the ruthlessness by which she recruits new members and conducts her business.
The bay that surrounds the island city of Kolkuzhn is known by many as Chezri's Snout.
This has naturally led to some people, especially those who look down on the pirate city, referring to it as Chezri's Snot.
Under Bloodscale's stubborn leadership (backed by a whole lot of stolen gold), some early-days policing from the Bloodeyes themselves, and a few choice public executions, the city went from a chaotic no-man's land to a pirate's safe zone haven in only a few months.
The island has seen a lot more traffic since then (with taxes and such going to Bloodscale, of course), and Bloodscale herself essentially unkillable, Kolkuzhn has, despite all the piracy, never been more stable.
Come and get me
Sitting on an island inside a calm bay, surrounded by any number of pirate ships that hold an uneasy truce with each other and are therefore bursting to get their fighting and looting fix somehow, Kolkuzhn is very easy to defend from any forces from the Chezrian mainland.
The nearest land to the north is all desert, and the sliver of coastline agricultural settlements, including Gok-Rock, doesn't have the infrastructure to attempt an invasion, especially when the Chezrian Wheat shipped around them by the South Chezri Trading Company is one of the most profitable targets for pirates.
The best kind of lawful
Kolkuzhn is technically a very lawful place. Bloodscale set out a few basic rules, and the staff in the Kolkuzhn Jailhouse ensure that the people in the city abide by them religiously.
That said, the rules essentially equate to:
Don't kill, unless in self-defence or the defence of another
Don't step aboard someone else's ship without explicit consent
Don't bring mainland law-enforcers to shore
When those are the only rules set-in-stone, with everything else left up to the discretion of the Jailhouse--or Bloodscale herself, when she's on-shore--it's easy to see how much drinking, gambling, fighting, thieving, and other generally indulgent behaviour the city sees.
A renowned undead pirate who captains a ship with literally bloody sails