Potential Changes to the Texas Business Courts’ Jurisdiction and Operation

Changes to the Business Courts Under House Bill 40

Besides including a number of minor amendments to ensure business courts are governed consistently across Texas’s statutory landscape, H.B. 40 enacts a number of noteworthy changes affecting the authority and operation of business courts, including:

• Expanded Jurisdiction – H.B. 40 expands the concurrent jurisdiction of business courts by: (1) lowering the value threshold to count as a “qualified transaction” from $10 to $5 million; (2) relatedly, lowering the jurisdictional amount-in-controversy threshold from $10 million to $5 million; (3) providing jurisdiction over a broad range of intellectual property disputes, including for trade secrets disputes; and (4) providing jurisdiction to enforce arbitration agreements or review arbitral awards for almost all cases where a claim would otherwise fall under a business court’s jurisdiction. To note, the bill does remove consumer transaction disputes entirely from a business court’s jurisdiction.
• New Jurisdiction Rules – H.B. 40 also requires the Texas Supreme Court to adopt new rules governing the procedures to determine jurisdiction when a case is filed in business court and requires the high court to consider a number of policy objectives, including the purpose of the business courts and the “limited potential for the movement of an action between a district court and the business court.”
• Other Administrative Changes – H.B. 40 also includes several administrative changes that may be relevant to persons or businesses seeking to take advantage of this new dispute forum. Those include adding an additional judge for the First and Eleventh Divisions of the business court, which include Dallas and Houston, respectively, and eliminating the statutory provisions that would have abolished the divisions presiding over the less populous administrative regions on September 1, 2026, without reauthorization. The bill, for purposes of the business court divisions only, also moves Montgomery County to the Eleventh Division (Houston) from the Second Division.

Next Steps for House Bill 40

H.B. 40 will now move onto the Texas Senate for consideration before being sent to Governor Abbott for his signature. Although there is a strong likelihood that the bill will be approved by the Senate in its current form, there is a chance the Senate will amend the bill and seek re-approval by the House. Once the bill is fully enacted into law, its changes will take effect on September 1, 2025, unless more than two thirds of both the House and Senate vote in favor — in which case, it will take effect immediately.