Arkansas Code Title 14. Local Government § 14-54-208. Liability

(a) Every agreement or contract entered into pursuant to this subchapter shall have the status of an interstate compact, but in any case or controversy involving performance or interpretation thereof or liability thereunder, the municipalities involved shall be the real parties in interest. The state may maintain an action to recoup or otherwise make itself whole for any damages or liability which it may incur by reason of being joined as a party therein.

(b) The action shall be maintainable against any municipality whose default, failure of performance, or other conduct caused or contributed to the incurring of damage or liability by the state.