“Understanding the Implications of the Texas Business Court for Litigants, Attorneys, and Commercial Law: Insights from King & Spalding”

After years of attempts, Texas is set to become the 30th state to establish a specialized business court designed specifically for complex commercial cases. The Texas Business Court will start its first term on September 1, 2024, and will have 11 divisions that match the existing administrative divisions of the state judicial system. The governor appoints business court judges for two-year terms, and the court will have civil jurisdiction concurrently with district courts for disputes involving corporate governance, derivative proceedings, claims against organizations and executing officers, securities or trade control laws under state or federal law, contracts and business transactions, and conduct arising out of the Business Organization Code.

Specific rules and procedures will soon be enacted to govern the transfer of cases to the Business Court at the request of litigants, and the bill creates the 15th Court of Appeals, which will have exclusive jurisdiction over appeals against business court orders or judgments, or in its own proceedings related to business court actions or orders.

Proponents argue that an independent business court would save companies and the judicial system time and money, as it would be more efficient. Proponents also argue that the court’s expertise will develop Texas law on complex commercial matters, and that it creates additional incentives for businesses to continue to seek Texas as their corporate and legal home. Opponents, however, are not convinced that independent business courts serve the interests of justice and fairness, especially when judges are appointed by governors rather than by election.

The bill leaves the following key issues undecided: opinions, and procedures for transferring actions brought within the jurisdiction of district or county courts and business courts.

In conclusion, the establishment of a business court in Texas would likely have a significant impact on business litigation in the state, with potential benefits and drawbacks.

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