Nimh: That's the basic idea but there was an added twist because they were fighting over another teritory that was inhabited with another race and they sent one of the conquered race to the lesser fae as a peace offereing, maybe the former leader or something.

The idea of a three-way combat is quite interesting as well. Either that or it's a kind of council or something. What about if there are three warring nations (like you said) but there is a new threat on the horizon and to defeat it they must get past their differences and learn to work together. They agree to a council meeting with just the three leaders and things go from there but I may be overcomplicating things a little.