- In the last legislative session, the Texas legislature set up a new business court infrastructure.
- The courts have jurisdiction to hear business disputes where the amount in controversy is greater than $10 million.
- These new courts could potentially be a benefit to Texas businesses by streamlining the court system for its disputes.
The idea for this blog article came to me on Friday, September 1. I mention that specifically because that’s the date when all of the new laws from this year’s legislative session go into effect. And there are quite a few of them.
I don’t have time to review all of the new laws. If you want to meet for a beer, though, I’m happy to give you my opinion on some of the more well-known ones. But there is one that I think is particularly interesting. The legislature set up new business courts. So that’s what we are going to talk about this week.
What are Texas Business Courts
In this year’s legislative session, the House introduced a bill that sets up specific business courts in Texas. This bill was passed by the Senate and signed by Governor Abbott. Apparently there are some other states around the country who have something similar and that’s what these courts are modeled on.
The new business judicial district courts have specific civil jurisdiction that includes the following:
- A derivative action on behalf of a corporation;
- An action arising out of or relating to a qualified transaction (discussed below) where the amount in controversy exceeds $10 million;
- An action regarding the governance or internal affairs of an organization; and
- An action in which the amount in controversy exceeds $10 million, and that arises against, between, or among organizations.
There are a number of other scenarios where a business court could hear a claim, but these are probably the most common. A qualified transaction is defined under the business and commerce code as one involving a business and, in this case, the amount in controversy is greater than $10 million.
Specifically, however, the new business courts DO NOT have jurisdiction for claims seeking damages based on personal injury or death. Those would still have to be brought in civil district court as they do now.
Finally, while the courts are to be established starting now and this law is going into effect, it will not apply to any claims that happen prior to September 1, 2024. So basically the State has a year to set up these new courts.
What Do These New Courts Mean for Texas Businesses?
Its not totally clear yet what these new courts will mean for Texas businesses. Obviously, they have not been set up yet and there is no history or precedent. So we will know a lot more about how they will operate in a few years.
But there are at least two possibilities that could be beneficial for Texas business owners. The first is that its possible matters could be expedited and not take as long as they do know. If the only docket a court has is a bunch of business matters, you would think the court’s docket would be less busy and more streamlined. And thus litigation could be resolved quicker than in district court.
The other possible benefit is that the judges may be more knowledgeable of the issues facing businesses. If all the court sees are business-related matters then presumably the judges would have more knowledge of those matters. And – hopefully – the judges would have a business background.
Assuming these possibilities are resolved positively, then the new business courts could be a great benefit to the Texas business community. But it is way too early to know yet if the courts will actually work like that. So in the meantime, we will just have to wait and see.