Texas Legislature Continues to Tweak the Business Court Formula

On June 20, 2025, Texas Governor Greg Abbott signed House Bill 40 (H.B. 40), making changes to Texas’s business court. H.B. 40 signals the state’s growing commitment to its newly created business court. While the business court began to hear cases last year, the amendments reflected in H.B. 40 modify key aspects of the court’s jurisdictional scope and procedural structure, reflecting the legislature’s confidence in the court. As the business court takes on a larger role in the Texas legal landscape, attorneys should take this opportunity take a fresh look at the strategic opportunities that the business court presents.

Expanded Jurisdiction

The most significant reforms in H.B. 40 are the numerous modifications to the business court’s jurisdiction. The amount in controversy requirement has been lowered by 50%, from $10 million to $5 million, for all causes of action within the business court’s jurisdiction. Previously, the $5 million minimum applied only to certain disputes, such as derivative proceedings or securities claims. But now, the $5 million minimum applies across the board. The amendments also clarify that parties can reach that jurisdictional threshold by joining together “a series of related transactions.” This makes it easier for parties to reach the $5 million minimum, but also is likely to open the door to disputes about what constitutes a “related transaction.” Going forward, companies might consider including language in agreements addressing the relatedness (or not) of particular transactions, which could potentially help strengthen a later jurisdictional argument. And litigators should be mindful of other transactions that might be leveraged to bring a dispute within the business court’s jurisdiction.

The amendments also expand the business court’s substantive jurisdiction to include intellectual property, trade secret, and arbitration enforcement cases. A wide swath of attorneys who practice in those areas now have a new venue to consider. As intellectual property litigation—and in particular trade secret cases—become more common, Texas’s business court is likely be at the forefront.

Additionally, this expanded jurisdiction arguably impacts not just those cases filed on or after September 1, 2025, when the amendments become effective, but also any currently pending cases that will become newly removable. A party may remove an action to business court not later than the 30th day after the party discovered, or reasonably should have discovered, facts establishing the business court’s jurisdiction over the action. The jurisdictional expansion becoming effective on September 1, 2025, may provide a new opportunity for removal that did not previously exist. Litigants should consider whether any of their pending cases—particularly those filed after September 1, 2024, as discussed in more detail below—could benefit from proceeding in the business court. Thus, amendments to the business court’s jurisdiction may result in a wave of newly removed cases in September 2025.

Improved Clarity for Choice of Law Provisions

The amendments shorten the business court’s reach in one respect by limiting the circumstances in which parties can agree to litigate their disputes in business court. In the original statute, the parties to almost any kind of contract could agree to business court jurisdiction, but the amended language specifies that only business, commercial, or investment contracts can elect business court jurisdiction. While this likely will not have a material effect on the number of cases being filed in business court, this clarification ensures that the business court remains focused on the types of disputes for which it was created. Attorneys, meanwhile, should continue to pay close attention to any contractual language electing (or not) business court jurisdiction.

Transfer of Cases Filed Before September 1, 2024

Outside of these sweeping changes, H.B. 40 also weighs in on an issue that arose frequently when the business court first opened its doors: whether the business court can hear cases filed before September 1, 2024. H.B. 40 authorizes the transfer of cases filed before September 1, 2024 to the business court upon an agreed motion by a party and permission of the business court. This comes after multiple business court decisions holding that the business court statute as originally enacted did not allow transfer of cases that were filed before September 1, 2024. In response, the legislature has now opened the door to litigants that can convince the court that their case should be heard in a dedicated business court.

But the business court likely will not agree to hear all pre–September 1, 2024 cases. As detailed further below, the Texas Supreme Court is tasked with adopting various rules that will guide the business court, including rules for when the business court will allow such transfers. In adopting those rules, the Court will prioritize complex civil actions of longer duration, consider the capacity of the business court to accept the transfer without impairing its efficiency and effectiveness in resolving post–September 1, 2024 cases, and ensure facilitation of the fair and efficient administration of justice. Because transfer of the pre–September 1, 2024 cases requires an agreed motion, these transfers will likely be limited to the most complex of cases where all parties would prefer a more specialized court. But litigants should start planning now for whether requesting transfer might be an attractive option once the amendments become effective on September 1, 2025.

Supreme Court Will Establish Jurisdictional Framework

The legislature also tasked the Texas Supreme Court with creating a framework for resolving jurisdictional disputes. H.B. 40 lists a number of factors that the Texas Supreme Court must consider when establishing these rules:

• The business court’s purpose of efficiently addressing complex business litigation in a manner comparable to or more effective than the business and commercial courts operating in other states
• The commonalities of law and procedure between the business court and district courts
• The limited potential for the movement of an action between the business court and a district court
• The need for guidance on evolving usage of the business court and the Fifteenth Court of Appeals

Additionally, the legislature gave the Texas Supreme Court the discretion to, among others:

• Establish standards of proof
• Establish procedures for outside judges to review jurisdictional decisions by the business court
• Allow interlocutory appeals
• Create an accelerated appeal process

The rules that the Texas Supreme Court establishes are likely to put more meat on the bones—and present an opportunity for interested parties to weigh in on draft rules. But in the meantime, the factors listed in H.B. 40 provide insight into how the legislature envisions the Texas business court, and in particular the importance of the Texas business court comparing favorably to business and commercial courts operating in other states. Parties involved in jurisdictional disputes in the coming months, even before the Court begins its rulemaking, should focus on the considerations listed in H.B. 40.

The Business Court Is Here to Stay

Further, for those who are worried that the business court might be a flash in the pan, the legislature eliminated the sunset provision for the six business court divisions currently without any judges. Parties in all districts, not just the few that have already received guaranteed funding, should proceed with the knowledge that the business court is likely here to stay after a successful debut year.

Takeaway

H.B. 40 clarifies the legislature’s view on the issues the business court has been addressing, solidifies the business court’s position in the Texas legal system, and expands the court’s ability to hear cases. Attorneys should familiarize themselves with the procedures, regulations, and trajectory of the business court, as it is sure to take on a bigger role in the Texas legal world.

This post is as of the posting date stated above. Sidley Austin LLP assumes no duty to update this post or post about any subsequent developments having a bearing on this post.