The Texas Senate passed House Bill 19 on May 12, 2023. Once Governor Greg Abbott signs the bill, Texas will establish a new specialized court that will alter the resolution of high-stakes business disputes.
Beginning on January 1, 2025, this court will adjudicate derivative actions and business disputes involving at least $10 million. Similar to removal procedures in federal court, plaintiffs would have the right to file suit directly in the business court, while defendants would have the right to remove a case to the business court.
Texas’s Business Courts Are Established By Recent Legislation
In addition, the business court would have supplemental jurisdiction over “all matters arising out of or related to” business disputes, with the exception of claims against government entities, personal injury claims, Deceptive Trade Practices Act, or DTPA, claims; and claims under the Family Code, Estates Code, and Title 9 of the Property Code, which the business court could only hear by agreement of the parties.
First established in major metropolitan areas, the business court will be comprised of justices appointed by the governor and confirmed by the Senate for two-year terms.
Each judge must have at least ten years of experience as a practitioner or civil court judge in complex commercial litigation or business transactions. In contrast to other entry-level courts in Texas, business court judges will be required to issue written opinions, which is intended to provide more certainty to the parties during the litigation process.
The law, according to its proponents, who include Governor Abbott, aims to place Texas’s judicial system on par with other specialized, business-focused state legal systems, such as Delaware’s and New York’s. It is beneficial for litigants in Texas to comprehend how to invoke or circumvent the business court’s jurisdiction.