The Texas Business Court: What You Need to Know

Texas has joined more than two dozen other U.S. states in creating a court system to handle certain business disputes. Companies with cases in the new Texas Business Court will appear before appointed judges with expertise in corporate and complex litigation matters. Proponents envision more predictable and efficient resolution of business litigation.

• What is the Texas Business Court?
• Why is Texas creating a court system for certain business cases?
• What practical effect could the Texas Business Court have on my business and litigation?
• What should a company with operations in Texas do?
• What cases will the new court system hear?
• What cases may not be brought before the new court system?
• Who will choose the judges – and what are the minimum qualifications?
• When – and where – will the Texas Business Court start hearing cases?
• Will judges issue written opinions?
• What about trials?
• Where will the new court system hold ordinary hearings?
• Will the Texas Business Court face a court challenge?

What is the Texas Business Court?

It’s a new set of trial-level courts meant to resolve corporate and complex disputes in Texas, the world’s 9^th largest economy.

Why is Texas creating a court system for certain business cases?

Proponents say the system will:

• Streamline lawsuits involving corporate law and complex litigation.
• Create a body of relevant case law by requiring written opinions.
• Increase confidence in the state’s judicial system and help attract companies to Texas.

What practical effect could the Texas Business Court have on my business and litigation?

The system creates the prospect of more predictability and efficiency by having cases heard by judges with a background and focus on business law rather than judges with a broader and more diverse caseload.

What should a company with operations in Texas do?

The state will share more guidance before the court system begins hearing cases in September 2024. In the meantime, companies should consider:

• Making clear in contracts that legal disputes will be resolved in the Texas Business Court.
• Specifying in contracts that the Texas Business Court will resolve as many claims in a dispute as the law permits, including supplemental claims that are not explicitly within the court’s jurisdiction already.
• Removing provisions from contracts that seek to resolve disputes through arbitration.

What cases will the new court system hear?

The new courts will hear cases involving:

• Alleged breaches of contract with at least $10 million in controversy where the parties agree to jurisdiction in the business court.^[*]
• The finance or business code and at least $10 million in controversy.^[*]
• Corporate law issues relating to organizational governance or securities that involve at least $5 million in controversy.* (The $5 million threshold does not apply if one of the parties is publicly traded.)

What cases may not be brought before the new court system?

Judges in the Texas Business Courts will not hear cases that:

• Involve probate law, family law, the Deceptive Trade Practices Act (DTPA) and consumer complaints.
• Deal with insurance, injury, death, or medical or legal malpractice.
• Are brought by or against government entities.

Who will choose the judges – and what are the minimum qualifications?

The Texas governor will appoint judges to two-year terms with the advice and consent of the Texas Senate.  The governor may reappoint judges at the end of a term.

Judges in the Texas Business Court must:

• Have a Texas law license and at least 10 years of experience in complex litigation, corporate transaction and/or as a Texas judge.
• Have at least five years residency in a county of their judicial district.
• Be 35 or older.

When – and where – will the Texas Business Court start hearing cases?

The court is scheduled to hear cases after September 1, 2024. The plan is to set up the first courts in and around Austin, Dallas, Fort Worth, Houston and San Antonio. By mid-2026, the goal is for the new courts to open in other parts of the state.

Will judges issue written opinions?

Yes. The idea is that, over time, the written decisions will create a body of precedent that companies can use to navigate Texas business practice and litigation. By contrast, Texas district court orders are rarely published.

What about trials?

Trials in the Texas Business Court will take place in the county where the case could have been brought, where the parties agreed to litigate the case or where the parties and the court agree to try the case. Trials may be to the bench or before a jury.

Where will the new court system hold ordinary hearings?

Most hearings will be remote. The court can’t require physical attendance at non-trial proceedings unless both parties agree.

Will the Texas Business Court face a court challenge?

Probably. The Texas Constitution requires “district” court judges to be elected, rather than appointed. Some have also argued that allowing the state governor to appoint judges creates checks-and-balances concerns among the three Texas branches of government.

^[*] The amount in controversy excludes attorney’s fees, interest, court costs, statutory damages, penalties, and punitive damages.