On June 20, 2025, Governor Greg Abbott signed House Bill 40 into law, which enacts amendments and improvements to the statutes governing the Texas Business Court. H.B. 40 takes effect September 1, 2025.
H.B. 40 expands the Business Court's jurisdiction, clarifies the Business Court's concurrent jurisdiction with the district courts, and directs the Supreme Court of Texas to adopt rules and procedures for the prompt and final determination of Business Court jurisdiction early in a proceeding. The Bill also amends statutory provisions to improve the functioning of the Business Court. H.B. 40 is among a growing number of recent reforms designed to establish Texas as the premier state for business incorporation.
Notable changes enacted by H.B. 40 include:
- Lowering and clarifying the jurisdictional threshold. The Bill reduces the Business Court's jurisdictional amount in controversy for covered commercial disputes from $10 million to $5 million and lowers the dollar value of a "qualified transaction" from $10 million to $5 million. [Amended Sections 24A.004(d) and 25A.001(14), Texas Government Code]H.B. 40 also expands the meaning of "qualified transaction" to include "a series of related transactions," allowing the monetary threshold of $5 million to be met through multiple smaller transactions. [Amended Section 25A.001(14), Texas Government Code]. Finally, for purposes of calculating the amount in controversy, H.B. 40 clarifies that "[t]he amount in controversy for jurisdictional purposes . . . is the total amount of all joined parties' claims." [New Section 24A.004(i), the Texas Government Code]
- Clarifying and Expanding Business Court
jurisdiction. The Bill adds provisions to Section 24A.004
to confirm and in some instances expand the Business Court's
jurisdiction over particular disputes if the amount in controversy
threshold is met:
- Intellectual Property: H.B. 40 provides that the Business Court has jurisdiction over actions "arising from or relating to the ownership, use, licensing, lease, installation, or performance of intellectual property," including "computer software, software applications, information technology and systems, data and data security, pharmaceuticals, biotechnology products, and bioscience technologies and trade secrets" as defined in Civil Practice and Remedies Code Section 134A.002.[New Subsection 24A.004(d)(4), the Texas Government Code].
- Trade Secrets: H.B. 40 provides that the Business Court has jurisdiction over trade secret claims under Civil Practice and Remedies Code Section 134A.002. [New Subsection 24A.004(d)(5), the Texas Government Code].
- Arbitration Matters: H.B. 40 provides that the Business Court has jurisdiction to enforce an arbitration agreement, appoint an arbitrator, or review an arbitral award, or in other judicial actions authorized by an arbitration agreement, Civil Practice and Remedies Code Chapter 171 or 172, or the Federal Arbitration Act, if a claim in the arbitration is described by Subsections (b) or (d) of Section 24A.004. [New Section 24A.004(d-1), the Texas Government Code].
- Investment Contracts: H.B 40 now gives the Business Court jurisdiction over disputes "arising out of a[n] . . . investment contract or transaction . . . ." [Amended Subsection 24A.004(d)(2), Texas Government Code]
- Excluding Consumer Transactions from Jurisdiction: The Business Court originally, had supplemental jurisdiction over claims related to certain "consumer transactions," as defined by Section 601.001, Business & Commerce Code [Section 25A.004(g)(4), Texas Government Code]. Those claims are now among those for which "[t]he business court does not have jurisdiction . . . regardless of whether the claim is otherwise within the court's supplemental jurisdiction . . . ." [New Subsection 25A.004(h)(4), Texas Government Code]
- Confirming enforceability of internal governance venue clauses. H.B. 40 confirms that venue for actions described by Section 25A.004(b)(2), (4), (5) or (7) may be established for the Texas Business Court in a company's governing document. [New Subsection 25A.006(a)(2), Texas Government Code]. The amendment provides companies with greater certainty when drafting their corporate governance documents. Notably, this new provision does not apply to "derivative claims," whose jurisdictional reference – Section 25A.004(b)(1) – is not contained in the new language.
- Retaining the Remaining Business Court Divisions and Montgomery County to a New Division. When the Business Court was originally created, the six divisions for which funds were not appropriated were set to be abolished if not appropriated funds this legislative session. H.B. 40 removes that language, so that future legislatures can consider whether to fund any of the remaining six divisions. [Amended Subsections 24A.003(d), (g), (h), (i), (k), and (l), Texas Government Code]. H.B. 40 also transfers Montgomery County out of the inactive Second Business Court Division, and into the Eleventh Business Court Division – which includes Harris County. [Amended Subsections 24A.003(d) and (m), Texas Government Code]
- Confirming the Business Court's concurrent jurisdiction with District Courts. The Bill confirms that the Business Court has concurrent jurisdiction with the district court over actions listed in Section 25A.004(b) of the Texas Government Code even if a statute provides exclusive jurisdiction to the district courts. [Amended Subsection 25A.004(b)]. For example, the Texas Business Court may hear cases involving the validity of defective corporate acts and shares under Texas Business Organizations Code Section 21.914 despite Section 21.915 providing exclusive jurisdiction over these actions to the district courts.
- Directing the creation of a new process to promptly resolve questions of jurisdiction. The Bill directs the Supreme Court of Texas to adopt rules and procedures to allow for a prompt and final determination of the Business Court's jurisdiction early in a case. [New Section 25A.0041, Texas Government Code]
- Authorizing visiting judges to increase court efficiency. Judges and justices with the requisite qualifications are now authorized to serve as visiting judges on the Business Court, increasing prompt adjudication of cases filed on the Business Court's docket. [Amended Section 25A.014, Texas Government Code]
- Authorizing the Business Court to receive transfers of cases that were commenced prior to September 1, 2024. If the parties file an agreed motion and the Business Court consents, the Business Court may receive transfers of cases filed before September 1, 2024 from district and county courts that are within the Business Court's jurisdiction, under rules to be adopted by the Supreme Court of Texas. [New Section 25A.021, Texas Government Code]. Before this amendment, the Business Court could not accept transfers or removals of cases commenced prior to September 1, 2024. This amendment, however, is intended to be limited to permit the Business Court to resolve large, complex business cases that have been pending in other state courts for four or more years. The Bill directs the Supreme Court of Texas to consider the capacity of the Business Courts and ensure that transfers of older cases will not impair the Business Court's efficiency in resolving actions commenced on or after September 1, 2024.
H.B. 40 also amends portions of the Civil Practice & Remedies Code and the Government Code to reference the Business Court or clarify its applicability, ensuring consistency across Texas statutes.
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