Each Great House appoints a representative to the Grand Council, if the House Head themselves does not sit in representation. The Grand Council's primary function is the governance of Morrowind. The Houses largely tend to their own affairs and land, so the Grand Council is hesitant to pass laws that affect the entirety of Morrowind. Rather, they deal with external powers, as well as decide policy between Houses. Conventions, like the decision to uphold the illegality of slavery, are held and decided by the Council. Representatives largely look after the interests of their house first, rather than make collective decisions for the country.
The Houses form factions when their interests are aligned. Uvenim and Indoril form a conservative faction, Telvanni and Dres a liberal one, and Redoran, Indaram, and Sadras form a progressive faction.