Overview
On June 20, 2025, Governor Abbot signed House Bill 40, authorizing sweeping amendments to the Texas Business Court’s jurisdictional limits and the Business Court’s procedural framework. Most notably, the new law lowers the jurisdictional amount-in-controversy requirement from $10 million to $5 million for certain claims, and it provides for the early and final resolution of whether the claims meet the jurisdictional limits, rather than waiting until after trial. The law becomes effective on September 1, 2025.
Expanded Jurisdiction
The Business Court now has concurrent jurisdiction with district courts over a broader range of high-value business disputes. Most notably, the new law lowers the "qualified transaction" amount-in-controversy requirement from $10 million to $5 million. Now, as long as the dispute arising out of a "qualified transaction" (defined as including consideration of more than $5 million) has an amount-in-controversy of more than $5 million, parties can bring their dispute in Business Court. This halves the previous jurisdictional limit.
The amendments also authorize the Business Court to hear actions with an amount-in-controversy exceeding $5 million that arise out of intellectual property disputes and arbitration-enforcement-related matters. Notably, the revisions did not alter the supplemental jurisdiction of the Business Courts: claims proceeding under supplemental jurisdiction may only proceed with the consent of the parties, which creates the potential for parallel litigation over a related dispute that proceeds in different forums.
Procedural Reforms
One of the more exciting provisions in the new law is the provision related to the early and final resolution of jurisdictional limits. As discussed in an earlier article, under the initial Business Court framework, there was a risk that a party asserting jurisdiction may litigate a case through trial only for the court to conclude that the Business Court lacked jurisdiction—such as if the jury decided that the amount in controversy was less than $10 million—resulting in the case being remanded or dismissed.
The new law instructs the Texas Supreme Court to adopt rules to streamline jurisdictional determinations, including:
- Summary proceedings for jurisdictional challenges.
- Standards of proof and deadlines for raising jurisdictional objections, and
- Procedures for interlocutory and accelerated appeals.
As a result, litigants will have certainty at the outset of the proceedings whether their case meets the jurisdictional thresholds of the Business Court. We expect that the proceedings will be similar to proceedings for compelling arbitration or affirming arbitration awards, with an eye towards efficiency and expedience.
The law also offers clarity to defendants who want to remove to the Texas Business Courts. Before the amendment, removal was allowed only in instances where removal was attempted within 30 days that the party discovered facts establishing the court’s jurisdiction over the action. The question that arose was, what if the parties were mediating and the defendant knew that the case involved, for instance, a derivative proceeding, but the plaintiff waited to file and did not serve the defendant within the 30 days? Similarly, questions arose over fact patterns where a defendant became aware of a lawsuit but service had been delayed, resulting in a series of confusing and possibly contradictory deadlines. Now, defendants have within 30 days of service of process to remove according to the new rules adopted by the Texas Supreme Court.
Finally, the new law grants litigants whose cases were filed before September 1, 2024, (the date the Business Court began accepting cases) the option to remove to the Business Court as long as the parties agree and the court approves. This legislative change reverses prior opinions from the Business Court.
Venue Reforms
The new law also altered the divisions of the Business Courts. Given that The Woodlands, within Montgomery County, is home to numerous large businesses and is generally perceived as part of the greater Houston Metro area, the law has provided that Montgomery County is now included in the Eleventh Business Court Division instead of the Second, which means that companies who have disputes with venue in Montgomery County may now bring their disputes in Business Court.
These changes are expected to drive the continued growth and support of the Texas Business Courts, signaling to the business community that the legislature is attuned to the concerns of the Texas bar and businesses operating in Texas. This responsiveness highlights Texas's commitment to positioning itself as a premier destination for resolving business disputes.
