There should be three settings for trade routes in diplomacy:

1) Do not allow trade through territory

2) Allow trade through territory for a fee

3) Allow trade through territory for free

This way, price of trade could be prohibitive if it goes through multiple empires and players would be incentivized to seize key territory for both resources and trade access. Perhaps there could be separate options for sea/land.

Wald

I really like this idea as it leads to better historical realism.

The question about coding would be, can trade find a different way or is there only one fixed path (well two: one water path, one land path)? If the former, it works. Because if trade can only take one path, then there wouldn't be the option to reroute trade to comply with treaties.