The Byzantine–Venetian War of 1171 was fought between the Byzantine Empire and the Republic of Venice as a result of the Byzantine imprisonment of Venetian merchants and citizens across the Empire. 10,000 Venetians were imprisoned in the Byzantine capital, Constantinople, alone. Despite Doge Michiel's apparent will to pursue a peaceful solution, outrage in Venice itself swung popular opinion in the favour of full scale war against Byzantium. Doge Michiel had no choice but to set out for war, which he did in mid-late 1171.
Background
Although trade was very important for the Byzantine economy, political relations with Italian merchants soured at times. Local merchants also resented the Italian merchants advantageous terms of trade. Tensions rose in 1171; Manuel I ordered attacks on Venetian merchants, property and ships.
Course of the War
On the 21st of March, 1171, Manuel I orders the arrest of all Venetians residing in Byzantion (Constantinople), resulting in more than 10,000 arrests and the re-registration of their property to the state treasury.
Aftermath
The disastrous defeat of Venice in this war was one of the greatest military blunders in the city-state's history, and permanently altered Venice's position on foreign affairs. A formal truce between the two empires would not be ratified until 1177, with minor skirmishes continuing until then.