Shackles appear to bind units that have been taken prisoner. The capturing side can manifest these chains on them at will, and their ruler may likewise dismiss them at will by releasing the prisoner. They can also be removed by commanders to aid in torture.  When a city's Garrison is captured, units of the owning side in other city zones automagically have shackles appear on them.
Shackles behave differently for units in the capturing side than for the prisoner. Lord Crush had his prison clothes removed and was dressed in fine Raiment by man servants, all without removing his shackles, because these seemed to allow them better access.