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Initially, though the Imperial legions and navy were widely considered undefeatable, House Indoril and the Temple hierarchy proposed to resist to the death. Redoran and Dres stood by Indoril, with Telvanni remaining neutral. Hlaalu proposed accommodation.
Contrived border incidents in Black Marsh ended inconclusively, but the swampy terrain did not favor legion and navy coordination. Against the legions massed west of Silgrad Tower and Kragenmoor, and the legions west of Blacklight and Cormaris View, Morrowind had pitifully small militias stiffened by small companies of Redoran mercenaries and elite units of house nobles and Temple Ordinators and Armigers. Further complicating matters was the refusal of Indoril, Dres, Hlaalu, and Telvanni to garrison the western borders; Indoril and Dres proposed, rather than defend the western border, instead to withdraw to the interior and fight a guerilla war. With Hlaalu advocating accommodation, and Telvanni remaining neutral, Redoran therefore faced the prospect of standing alone against the Empire.
The situation changed radically when Vivec appeared in person in Vivec City to announce his negotiation of a treaty with Emperor Tiber Septim, reorganizing Morrowind as a province of the Empire, but guaranteeing "all rights of faith and self-government." A shocked Temple hierarchy, which apparently had not been consulted, greeted the announcement with awkward silence. Indoril swore they would resist to the death, with the loyal support of Dres, while Redoran, grateful for a graceful excuse to avoid facing the legions unsupported, joined with Hlaalu in welcoming the agreement. Telvanni, seeing which way the wind blew, joined with Hlaalu and Redoran in supporting the treaty.
Nothing is known of the circumstances of the personal meeting between Septim and Vivec, or where it took place, or the preliminaries which must have preceded the treaty. The public reason was to protect the identities of the agents involved. In the West, speculation has centered around the role of Zurin Arctus in brokering the agreement; in the East, rumors suggest that Vivec offered Numidium to aid in the conquest of the Altmer and Summerset Isle in return for significant concessions to preserve self-rule, house traditions, and religious practices in Morrowind.
The Lord High Councilor of the Grand Council, an Indoril, refused to accept the treaty, and refused to step down. He was assassinated, and replaced by a Hlaalu. House Hlaalu took the opportunity to settle some old scores with House Indoril, and a number of local councils changed hands in bloody coups. More blood was shed in these inter-house struggles than against the Imperial Legions during Morrowind's transition from an independent nation to a province of the Empire.
The generals of the legions had dreaded an invasion of Morrowind. The Dunmer were widely regarded as the most dreadful and fanatic foes, further inspired by their Temple and clan traditions. The generals had not grasped the political weaknesses of Morrowind, which Emperor Tiber Septim recognized and exploited. At the same time, given the tragic depopulation and destruction experienced by the other provinces conquered by Septim, and the swift and efficient assimilation of Morrowind into the Imperial legal systems and economy, with relatively small impact on lower or upper classes of Morrowind's citizens, the Tribunal also deserves some credit for recognizing the hopelessness of Morrowind's defense, and the chance of gaining important concessions at the treaty table by being the first to offer peace.
By contrast, many Indoril nobles chose to commit suicide rather than submit to the Empire, with the result that the House was significantly weakened during the period of transition, guaranteeing that they would lose much of their influence and power to House Hlaalu, whose influence and power was waxing with its enthusiastic accommodation with the Empire. The Temple hierarchy more skillfully managed their loss of face, remaining aloof from political struggles, and earning the good will of the people by concentrating on their economic, educational, and spiritual welfare.