On June 20, 2025, Governor Abbott signed House Bill 40 (HB 40) into law, which, among other things, expands the jurisdiction of the recently created Texas Business Court. HB 40’s changes to the Business Court include:
(1) Broadening the definition of a “qualified transaction” for jurisdictional purposes and lowering the court’s amount-in-controversy requirement from $10 million to $5 million for disputes involving qualified transactions or contracts where the parties have agreed to Business Court jurisdiction.
(2) Giving the Business Court jurisdiction over trade secret misappropriation cases as well as other intellectual property disputes.
(3) Expressly vesting the Business Court with jurisdiction to enforce arbitration agreements and review arbitral awards for almost all cases where a claim would otherwise fall under the Business Court’s jurisdiction.
The bill will go into effect on September 1, 2025, giving companies just over two months to prepare. With that in mind, this article outlines the key provisions of HB 40, its implications for corporate legal departments, and the practical steps in-house counsel should take now to stay one step ahead.
Background: The Emergence of The Texas Business Court
Texas has long been a magnet for business, but until recently, it lacked a dedicated judicial infrastructure for resolving high-stakes commercial disputes. In 2023, the Texas Legislature authorized the creation of the Business Court, modeled after Delaware’s Court of Chancery and similar courts in New York and North Carolina. These courts were designed to provide judicial expertise in complex business law, streamline litigation procedures, and promote consistency in commercial rulings.
In its first year in operation, the Business Court has lived up to its supporters’ hopes, serving as an efficient, commercially minded forum with the resources to provide written, reasoned decisions on key issues. In passing HB 40, the Legislature took the opportunity to expand the Business Court’s reach and shed light on various issues that were left unresolved in the original statute.
Key Provisions of House Bill 40
HB 40 amends multiple sections of the Civil Practice and Remedies Code and Government Code. The effect of these amendments is to both broaden the Business Court’s jurisdiction and further incorporate it into the broader framework of the Texas judicial system. The most significant changes include:
(1) Jurisdictional Expansion
HB 40 expands the Business Court’s jurisdiction over commercial disputes in four key ways.
First, it expands the Business Court’s jurisdiction to encompass a variety of disputes involving intellectual property and trade secrets. HB 40 provides that the Business Court has jurisdiction over all actions arising out of or relating to the ownership, use, licensing, lease, installation, or performance of intellectual property when the amount in controversy exceeds $5 million. Intellectual property is defined to include trade secrets as well as computer software, information technology and systems, and pharmaceuticals amongst other categories of intellectual property. Further, HB 40 expressly provides that claims under the Texas Uniform Trade Secrets Act fall within the Business Court’s jurisdiction.
Second, HB 40 modifies the definition of a “qualified transaction” over which disputes may be subject to the Business Court’s jurisdiction, as well as the amount in controversy requirement for disputes involving qualified transactions.
Before the enactment of HB 40, a “qualified transaction” was one where a party either gave or received consideration with a value of at least $10 million. HB 40 lowers this amount to $5 million and also clarifies that a “qualified transaction” can include a “series of related transactions.”
In addition, HB 40 now requires only $5 million in controversy for the Business Court to have jurisdiction over disputes arising out of a qualified transaction or a dispute arising out of a business or commercial contract where the parties have agreed to Business Court jurisdiction. Previously, Section 25A.004(d) of the Code had required that the amount in controversy in such disputes exceed $10 million exclusive of interest, statutory damages, exemplary damages, penalties, attorneys’ fees, and court costs.
Third, HB 40 provides a limited avenue to transfer to the Business Court cases that were filed in district courts before September 1, 2024 (when the court first came into existence). As provided by the bill, such cases may be transferred to the Business Court if the following requirements are met:
- The case is otherwise within the jurisdiction of the Business Court
- All parties to the case agree to the transfer
- The Business Court grants permission for the transfer
For example, for a case that would otherwise fall within the Business Court’s jurisdiction but was filed in 2023 in Harris County District Court, the parties could file an agreed motion to transfer the case to the Business Court. If the Business Court granted permission, the case would be transferred from the District Court to the Business Court.
Fourth, HB 40 expressly vests the Business Court with jurisdiction to enforce any arbitration agreement, appoint an arbitrator, or review an arbitral award for almost all cases where a claim would otherwise fall under the Business Court’s jurisdiction.
(2) Additional Governing Procedures From the Texas Supreme Court
HB 40 empowers the Texas Supreme Court to further clarify the procedures applicable to the Business Court’s determination of jurisdiction. This likely includes establishing procedures regarding:
- The appropriate standards for proof
- Limitations on when an action can be brought in the Business Court
- The determination of jurisdictional issues based on pleadings or summary proceedings
- Prompt and effective review over jurisdictional issues
The Texas Supreme Court, however, must only establish such procedures to promote the prompt, efficient, and final determination of jurisdictional issues.
(3) Interlocutory Appellate Review by the Fifteenth Court of Appeals
HB 40 amends Section 51.014(a) of the Civil Practice and Remedies Code to make clear that the grounds under which a party can seek interlocutory appellate review from a district court apply equally to the Business Court. Any such appeal will necessarily go to the Fifteenth Court of Appeals, which has exclusive appellate jurisdiction over orders and judgments issued by the Business Court.
Implications for In-House Counsel
The enactment of HB 40 has far-reaching implications for how corporate legal departments manage litigation risk, draft contracts, and engage with outside counsel.
(1) Forum Selection and Contract Drafting
With the Texas Business Court now fully operational and procedurally integrated, in-house counsel may want to reassess forum selection clauses in contracts. Key considerations include:
- Whether to opt into or out of the Business Court’s jurisdiction
- The potential benefits of specialized judges for complex disputes
- The implications of centralized appellate review
Transactions involving a number of agreements, arbitration demands, or intellectual property ownership or use should be reviewed and potentially revised to reflect the new judicial landscape.
(2) Litigation Risk Management
The Business Court is expected to handle cases more efficiently, with judges who are well-versed in complex commercial law. This may reduce litigation timelines, increase predictability in rulings, and encourage earlier settlements. In-house teams should recalibrate litigation risk models and cost projections to reflect these efficiencies.
(3) Discovery and Compliance Protocols
Because the Business Court follows the same procedural rules as other civil courts, existing compliance and discovery protocols remain largely applicable. However, the specialized nature of these courts may lead to more rigorous scrutiny of financial and corporate records, as well as higher expectations for legal argumentation and expert testimony.
Legal departments should ensure that document retention policies and litigation readiness plans are up to date and tailored to the Business Court’s expectations.
Conclusion
HB 40 not only expands the jurisdiction of the Business Court, but clarifies various issues left open by the original Business Court statute. In enacting this bill, the Legislature has confirmed the critical importance of the Business Court in resolving complex business disputes going forward.
For in-house counsel, HB 40 is both a challenge and an opportunity. Those who proactively adapt to the new system—by updating contracts, refining litigation strategies, and engaging with the Business Court process—will be better positioned to protect their companies’ interests in the years ahead.
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