Board Thread:Theories and Speculation/@comment-3568954-20180914003134

the anime stated that orochimaru conquered the land of sound and convinced its Daimyo to allow him to create Otogakure. when you conquer a nation you really don't have to convince the local king/ruler to allow you to do anything because you have conquered said land, from that moment on you are the true ruler and the local king, Daimyo etc is just a figurehead with no real authority.

so realistically the most logical reason orochimaru is not being arrested is because he most likely still has authority over the land of Sounds Daimyo and doing so would be an act of aggression towards another nation 