Nine months ago, skeptics questioned whether Texas’ ambitious new business court would survive infancy. The specialized tribunal, which began operations Sept. 1, 2024, faced early criticism over its narrow jurisdiction, steep amount in controversy requirements and procedural uncertainties — all of which threatened to limit the court’s effectiveness as a forum for many business disputes. Its original enabling statute also included sunset provisions for six of the eleven divisions, calling into question Texas’ long-term commitment to the business court.
The Texas Legislature has now resolved many of these doubts and doubled down on its judicial innovation. On June 1 — in the final hour of the final day of the legislative session — the Legislature passed House Bill 40 with significant support, considerably expanding the Texas Business Court’s jurisdiction. The law demonstrates Texas’ commitment to position itself as the premier destination for business litigation. Gov. Greg Abbott has now signed the bill, which will take effect Sept. 1.
That’s great news for Texas commercial litigators, and even better news for companies that find themselves facing litigation in Texas. Even in its nascent stages, the Texas Business Court has shown tremendous promise. The case load, though small, has allowed business court judges to move cases quickly. The court has issued nearly two dozen opinions in the first six months of 2025 on both substantive and procedural issues. Businesses clearly recognize the benefits of the forum, with about 150 cases being brought in the business courts since September 2024, including more than fifty between January and June 2025.
Early Growing Pains and Jurisdictional Hurdles
Last September, Texas joined the growing list of states with a dedicated business court devoted to complex commercial disputes. When it opened, the business court faced immediate challenges that left many business disputes outside the court’s jurisdictional reach. The court has around one hundred active cases pending statewide, raising questions about whether the court’s narrow jurisdiction excluded too many important matters.
Currently, the business court has original jurisdiction over two categories of cases: corporate governance disputes involving $5 million or more (with no amount-in-controversy requirement for cases involving public companies) and disputes over qualified transactions. Many business court cases to date have involved “qualified transactions.” But for those matters, the original statute imposes a demanding $10 million amount-in-controversy threshold. This high barrier has left many significant commercial disputes outside the business court’s reach. The court also lacks jurisdiction over cases filed before Sept. 1, 2024, preventing dozens of cases that otherwise qualified for business court jurisdiction from accessing the new forum.
As a result, the scope of the business court’s jurisdiction became a common, hotly contested issue in many cases, and these high jurisdictional hurdles denied access in a significant number of business disputes. Many observers began to wonder whether Texas had created a specialized court that was too specialized for its own good.
Legislative Cavalry Arrives
Enter House Bill 40, sponsored by Rep. Brooks Landgraf (R-Odessa) and Sen. Bryan Hughes (R-Mineola), with the strong support of Gov. Abbott, Lt. Gov. Dan Patrick and Speaker Dustin Burrows. The bill includes a series of early improvements that apply lessons learned from the business court’s early operations — expanding the court’s jurisdiction and further integrating the business court into the state’s existing judicial system.
The Texas House of Representatives passed the bill by a vote of 99-40 on May 13, demonstrating consensus within that chamber over the need to ensure the business court’s development and continuing success. After some wrangling with the Senate, the final version of HB 40 made its way to the governor’s desk. The changes included in the final version of HB 40 will drive a marked expansion in the business court’s operations:
- Expanded Access: Beginning Sept. 1, the court can assume jurisdiction over “qualified transactions” involving at least $5 million in consideration and with at least $5 million in controversy. The definition of “qualified transaction” has been expanded to cover a “series of related transactions” rather than just “a transaction,” reducing uncertainty surrounding disputes involving multiple transactions.
- Pre-Sept. 1, 2024 Cases: The bill allows cases filed before Sept. 1, 2024, to be transferred into the business court upon an agreed order and approval of the business court. The Legislature directed the Texas Supreme Court to adopt rules for when the business court should grant and withhold its approval.
- Intellectual Property: HB 40 gives the business court jurisdiction over a broad range of intellectual property disputes, including trade secret cases, licensing disputes and cases regarding the ownership, use, lease, installation or performance of any intellectual property.
- Arbitration Enforcement: The bill also allows the business court to enforce arbitration agreements or review arbitral awards in cases that would otherwise fall under its jurisdiction.
- Clarified Procedures: In response to concerns regarding the need for jurisdictional determinations early in the case, HB 40 requires the Texas Supreme Court to adopt rules for the prompt, efficient and final determination of the business court’s jurisdiction. The Texas Supreme Court has wide latitude to adopt rules that will determine when jurisdiction will be decided, whether an appeal is permitted and the applicable standard of proof.
- Enhanced integration: HB 40 further integrates the business court into the state judicial structure by amending the Texas Civil Practice and Remedies Code to ensure legal procedures like interlocutory appeals, recusal processes and document handling apply to the business court.
- Smoother Transitions: Business court judges have two-year terms. To facilitate smooth transitions, a judge appointed to the business court may begin 30 days prior to their term in order to allow time for training and transitioning cases.
- Future-Proofing: Perhaps most significantly, the bill preserves the potential for the business court’s statewide expansion by removing certain sunset provisions from the Government Code that would have abolished any non-operating business court divisions on Sept. 1, 2026. Each year, the Office of Court Administration must provide a report that contains recommendations to improve the functioning of the business court and projects the business court’s caseload over the following two years.
Despite strong support for HB 40 in its final form, passage was far from inevitable. Several high-profile provisions were dropped during negotiation. Earlier drafts would have increased the judges’ terms from two to six years, added a third judge to the Houston and Dallas divisions and extended court operations to rural districts — all measures that may be revisited in future sessions. Similarly, early versions of HB 40 would have allowed the court to assume supplemental jurisdiction over a broader range of related claims, more closely mirroring federal court procedures. Each of these proposed changes was ultimately rejected.
How HB 40 will alter the Texas Business Court’s caseload — and how the business court will respond — is the next phase of this judicial experiment. The relatively small caseload of the Texas Business Court allows its judges and their respective staff attorneys to move cases quickly and devote serious attention to each matter. Only time will tell whether the legislature has achieved the right balance of increasing the court’s caseload without jeopardizing its mission to give business court judges the time and resources needed to resolve multimillion-dollar commercial cases. However, if HB 40 is any indication of the Texas Legislature’s commitment to the business court, the Texas Legislature remains dedicated to that goal.
Strategic Positioning for National Competition
The timing of these expansions and clarifications of business court authority is no coincidence. Texas is locked in fierce competition with Delaware, New York and other states to attract major corporate litigation. The business court expansion arrives as part of a broader legislative package designed to enhance Texas’s business-friendly reputation.
Earlier this session, Gov. Abbott signed Senate Bill 29, which codifies the business judgment rule in Texas, providing legal certainty for corporate fiduciaries. Combined with HB 40, these enhancements position Texas to credibly challenge Delaware’s long-standing dominance in corporate law.
The passage of HB 40 represents more than a legislative victory — it demonstrates Texas’s willingness to adapt and improve its judicial innovations based on real world experience. Rather than shrinking at the business court’s early challenges, the legislature chose to double-down with meaningful additions. For businesses considering Texas as a litigation venue, the expanded jurisdiction removes significant barriers to entry.
HB 40 will go into effect on Sept. 1, marking the one-year anniversary of the business court’s operations with a dramatic expansion of its capabilities. For Texas practitioners, the message is clear: The business court is here to stay, and it is about to get busier.
Ben Barnes is a litigation partner at Dowd Bennett LLP in Dallas. He focuses on business disputes in the energy industry and related sectors.
Nick Brown is a litigation partner at Kirkland & Ellis in Houston. He has led complex, high-stakes cases in the technology, energy, manufacturing and distribution industries in federal district and appellate court, Texas state court and arbitration.