It can happen and does not matter when it happens. Besides there are also towns without militia, but that's not the point. Point is, there is no need to control NPC factions or restrict them from participating in PvP. Though the reputation loss shouldn't happen, but that's not really what is this topic about.
Anyway, with this attitude, this has zero chance to happen, and it's really a good thing. If even just the only one most stubborn grumpy malicious guy had problem with it, why would he have to deal with it? Because there is a faction that is entitled to have something special without competing for it? And really why should it be like that?