How the Texas Business Court Affects Houston Companies

The Texas Business Court, created under HB 40, reshapes how complex business disputes are handled in Houston and across Texas. It centralizes high-value cases involving governance, transactions, and commercial conflicts into a specialized forum designed to deliver faster, more consistent rulings. For Houston companies, this reform carries both advantages and risks.

Quick Takeaways

• Texas Business Court (HB 40) → New specialized court for complex business disputes.

• Jurisdiction → Covers governance, shareholder, IP, and commercial contract cases above set thresholds.

• Advantages → Expertise, predictability, streamlined litigation.

• Risks → New system, appellate uncertainties, venue limits.

• Impact on Houston → Could reshape business litigation strategy and forum selection.

What Is the Texas Business Court?

The Texas Business Court is a specialized trial court created by House Bill 40 (HB 40), effective September 1, 2024. Its purpose is to handle complex commercial disputes, giving Texas companies a dedicated judicial forum similar to Delaware’s Court of Chancery.

This court’s jurisdiction is statewide but limited to business-related cases. For Houston companies, it represents a significant shift in how corporate disputes may unfold.

Why Was the Texas Business Court Created?

Texas lawmakers introduced the court to:

• Attract more corporate headquarters and investments by providing a reliable litigation forum.

• Reduce docket pressure on traditional district courts.

• Increase consistency in rulings on business governance disputes in Texas.

For Houston businesses, the reform aims to enhance predictability in litigation outcomes, a factor that influences whether companies incorporate or remain headquartered in Texas.

Jurisdiction of the Texas Business Court

The Texas Business Court jurisdiction is limited to high-value disputes involving:

• Corporate governance and fiduciary duty claims.

• Shareholder derivative actions.

• Business contract disputes over a defined amount in controversy threshold.

• IP-related disputes connected to business entities.

It also holds concurrent jurisdiction with district courts, meaning litigants may sometimes choose between the two forums.

Amount in Controversy & Qualified Transactions

A case must typically involve a minimum dollar threshold (the amount in controversy) to qualify for the business court. Additionally, certain “qualified transactions” such as large mergers, acquisitions, or complex financing disputes automatically fall under its purview.

This ensures the court focuses on large-scale business litigation rather than routine commercial claims.

Key Venue & Procedural Changes

The venue amendments allow Houston companies to litigate in the Texas Business Court when disputes meet jurisdictional requirements. This may change forum-selection clauses in contracts, pushing more disputes into specialized forums.

Types of Cases Heard by the Court

Examples include:

• Business governance disputes in Texas (shareholder rights, board conflicts).

• Business court IP disputes Texas (trade secrets, licensing).

• Large-scale contract disputes tied to corporate transactions.

Advantages of the Texas Business Court for Houston Companies

• Judicial expertise in complex commercial matters.

• Consistency in rulings across similar disputes.

• Faster case resolution compared to overburdened district courts.

• Improved investor confidence in Texas as a litigation hub.

For Houston’s energy, healthcare, and tech sectors, this could be a competitive advantage.

Potential Risks and Challenges

• Uncertainty → As a new system, case law is limited.

• Appeals → Early rulings may face frequent appellate challenges.

• Jurisdictional disputes → Overlap with district courts could spark forum battles.

Houston companies should weigh these risks before selecting the business court.

How the Court Affects Houston Business Litigation

For Houston business litigation, this reform could:

• Shift contract drafting strategies to account for the new jurisdiction.

• Encourage forum selection clauses pointing to the business court.

• Create new litigation tactics for arbitration vs. business court disputes.

Arbitration & Enforcement in Business Court

The court has the authority to enforce arbitration agreements and awards. This makes it a useful venue when arbitration clauses intersect with Texas corporate law.

Appeals and Oversight

Decisions from the business court are appealable to intermediate courts of appeals. This may add complexity since appellate precedent will take years to mature.

Comparing the Texas Business Court to Other Forums

Forum	Strengths	Weaknesses
Business Court	Expertise, speed, predictability	New, untested system
Federal Court	Strong precedent, procedural rigor	Expensive, slower
Arbitration	Confidential, flexible	Limited appeal rights
District Court	Familiar, broad jurisdiction	Overloaded dockets

Forum Selection: Should Houston Companies Choose Business Court?

For contracts, companies should consider:

• Including business court clauses for governance or M&A disputes.

• Weighing risks of untested precedents.

• Comparing arbitration vs. litigation based on case type.

Practical Steps for Houston Companies to Prepare

1. Review contracts for forum-selection and arbitration clauses.

2. Update governance documents to reflect potential business court disputes.

3. Consult legal counsel to align litigation strategy with the new system.

4. Educate executives on risks and advantages.

Expert Insights: Legal & Business Perspectives

Houston attorneys note that the court will likely benefit large corporations engaged in frequent, complex disputes. Small-to-mid businesses may find the amount in controversy threshold excludes many of their cases.

FAQs:

1. What is the Texas Business Court?

A specialized court created under HB 40 to handle complex business disputes in Texas.

2. Which cases qualify for the court?

Corporate governance, shareholder disputes, high-value contracts, and IP-related business disputes.

3. Does it replace district courts in Houston?

No, it operates with concurrent jurisdiction in many cases.

4. What are the risks for Houston companies?

Uncertainty in precedent, overlapping jurisdiction, and possible increased litigation costs.

5. Should companies update contracts?

Yes, especially forum-selection and arbitration clauses to account for the business court option.

Final Thoughts for Houston Companies

The Texas Business Court is a landmark reform that could reshape business litigation in Houston. For companies, it presents new opportunities for predictability and efficiency — but also new risks and uncertainties.

👉 Next Step: Houston businesses should consult with experienced counsel to update contracts, assess litigation exposure, and strategically prepare for the era of the Texas Business Court.

Protect Your Houston Business with Trusted Legal Guidance

The Texas Business Court is changing how companies in Houston resolve complex disputes. Don’t leave your contracts, governance, or litigation strategy to chance.

Contact The Spencer Law Firm today to schedule a confidential consultation with our experienced Houston business attorneys. We’ll help you:

• Review and update contracts to reflect new jurisdiction rules.

• Assess risks and advantages of business court litigation.

• Strategically prepare for disputes involving governance, contracts, or IP.

👉 Request Your Consultation Now and safeguard your company’s future with proven legal guidance.

Legal Disclaimer

This article is for informational purposes only and does not constitute legal advice. Reading this content does not create an attorney-client relationship with The Spencer Law Firm. Laws and regulations may change, and the application of legal principles can vary depending on specific facts. For advice about your situation, please consult with a qualified business attorney in Texas.