Bipartisan Passage of House Bill 40 Clarifies Texas Business Court’s Jurisdiction

The Texas House of Representatives approved the bill earlier, on May 13, 2025, by a bipartisan vote of 99–40. With both chambers in agreement, the bill was signed by Governor Abbott, effective September 1, 2025.

Background: The Texas Business Court Initiative
The Texas Business Court is a new judicial forum designed to handle complex commercial litigation. Its primary goal is to promote efficiency and consistency in adjudicating high-value business disputes, modeled after similar courts in Delaware, New York and other business-focused jurisdictions.

However, the initial framework left some ambiguity in scope and application, prompting stakeholders across the legal and business communities to seek clarifying reforms. HB 40 aims to fill those gaps and expand the court’s practical utility.

HB 40: Expanding and Clarifying the Texas Business Court’s Jurisdiction
HB 40 is designed to expand the concurrent jurisdiction of the Texas Business Court through multiple changes, including:

• Lowering Jurisdictional Thresholds. To increase accessibility to the Business Court, HB 40 lowers financial thresholds by:

- reducing the general amount-in-controversy threshold from $10 million to $5 million; and

- reducing the threshold for qualifying a case as a “qualified transaction” from $10 million to $5 million.

This change is expected to increase the number of disputes under the court’s jurisdiction.

• Expanding the Definition of “Qualified Transaction.” Previously, a “qualified transaction” was defined as a single transaction. HB 40 broadens the definition by clarifying that a “qualified transaction” includes “a series of related transactions” for determining the amount in controversy, expanding eligibility for Business Court jurisdiction.

This clarification provides greater certainty for businesses with complex or multistep transactions, such as asset acquisitions or financing arrangements.

• Broader Subject-Matter Jurisdiction. The Business Court gains expanded concurrent jurisdiction with Texas district courts over a wider range of intellectual property and trade secrets disputes.
• Consumer Transaction Exclusion. In a key limitation, HB 40 excludes consumer transactions from the Business Court jurisdiction altogether, narrowing the court’s scope in this area. The exclusion underscores the court’s focus on business-to-business disputes, rather than business-to-consumer disputes.

• Before HB 40, only cases filed on or after September 1, 2024, were eligible for removal to the Business Court. Now, cases filed before September 1, 2024, are removable if all parties agree.

HB 40 also clarifies the time to remove a case where the parties do not agree on removal.

These revisions provide greater flexibility for litigants and more predictability in removal mechanics.

• Arbitration-Related Jurisdiction. The Business Court now has authority to enforce arbitration agreements and review arbitration awards in nearly all cases that otherwise fall within its jurisdiction. This provision ensures parties can rely on the Business Court to support alternative dispute resolution pathways.
• Statutory and Administrative Clarifications and Efficiencies. To avoid jurisdictional ambiguities and procedural inconsistencies, the bill amends the Civil Practice and Remedies Code to expressly reference “Business Court” in relevant sections that address administrative matters or procedures in the district and statutory courts, thereby clarifying the concurrent jurisdiction between the Business Court and traditional courts.

Additionally, to advance the Business Court’s goal of expediting commercial dispute resolution, the bill directs the Texas Supreme Court to establish procedures for promptly determining whether a case falls within the Business Court’s jurisdiction.

Looking Ahead
Gov. Abbott signed HB 40 into law on June 20. These new provisions will take effect on September 1, 2025. By clarifying jurisdiction, streamlining processes and expanding access, these reforms represent a significant step forward for the Texas Business Court, reinforcing its role as a specialized forum for efficiently resolving high-stakes business disputes.

(This alert is part of our Texas Legislative Session 2025 in Review series, designed to help readers navigate the evolving legal landscape and prepare for what lies ahead. In it, Pillsbury’s multidisciplinary team of attorneys offers in-depth analysis of the most consequential developments—what passed, what stalled and what it all means for stakeholders across key industries.)