The Texas Court system might not seem like an interesting topic for Texas Contractor readers, but the legislature recently created a new “Business Court” that may provide advantages to contractors with large contract disputes. There are 10 new sheriffs in town.

A state Business Court is not a new idea. The seven other states that have adopted business courts include Delaware, New York, and California. As Governor Greg Abbott has moved to make Texas the “Headquarter of Headquarters,” he assures us that the new Business Court provides greater certainty for major global corporations and Fortune 500 companies that are increasingly moving to Texas.

The 2023 legislation that established the Business Courts divided the state into 11 divisions, and the Business Court began working in 2024 in five of those divisions, with the remaining six to come online in the future. The five operating divisions cover over 80 counties in and around the Texas cities of Dallas, Austin, San Antonio, Fort Worth, and Houston.

But if a case is located outside these five pilot divisions, it can still be brought in Business Court and transferred to one of the operating divisions. The Business Court seeks to be flexible, and even when all 11 divisions come online, the intent is for the judges to be able to serve across divisions to ensure the caseload is properly managed.

Unlike the long-existing Texas District Courts, whose judges are elected, the Texas Business Court judges — two per division — are appointed by the Governor for two-year terms. They must have at least 10 years of experience in practicing complex civil business litigation or transaction business law, or serving as a judge in a Texas civil court. Abbott appointed the 10 judges for the pilot divisions in 2024. When he reappointed them in late July of this year, he said that the “Texas Business Court has resolved complex commercial disputes with unmatched speed and expertise.”

The Business Court has limited jurisdiction. It exists primarily to resolve derivative actions, actions challenging company governance or management decisions, or actions involving claims under securities laws or trade regulations. The Business Court will not hear disputes involving personal injury, death, insurance, certain professional malpractice claims, wills or estates, family law, consumer complaints, or Deceptive Trade Practices Act claims. The Business Court also has jurisdiction over certain arbitration-related actions when the controversy includes a claim otherwise within the court’s jurisdiction.

But there is one additional matter that may benefit larger contractors. The Business Court can hear contract disputes between businesses when the amount in controversy exceeds $5 million (not counting costs and attorney fees). Contractors and owners on private projects could agree in their contract that a contract dispute would be sent to the Business Court, provided the dispute’s dollar amount is over the jurisdictional threshold. Alternatively, the parties could agree on using the Business Court later, after the dispute arose. Construction cases represent approximately 5 percent of the Business Court filings so far.

Importantly, the $5-million-in-controversy requirement can be an aggregate of a series of related transactions, which has direct bearing on multi-party construction disputes (a not infrequent occurrence). A recent 2025 opinion issued by the Business Court held that the court had jurisdiction over a prime contractor’s third-party claims against 18 subcontractors stemming from a dispute with the project owner on a $60 million apartment complex project. Most subcontractors were individually below $5 million, but the Business Court said the case “concerns one construction project carried out through a network of related contractors.” For contractors, the practical lesson is that the Business Court may hear claims involving the whole project team.

Owners and contractors already include language in their agreements about where disputes will be resolved. Those terms could easily be modified to provide for agreed-upon Business Court jurisdiction for a qualifying dispute. And the Business Court’s enabling legislation gives the court “supplemental jurisdiction” over other claims arising out of the transaction that form “part of the same case or controversy.” We’ve heard long debates over where construction disputes should be decided. We know proponents of jury trials, bench trials, and arbitration. That debate can now include the Business Court.

Proponents of the Business Court have or will likely advance the following arguments:

• The judges are appointed based on their experience with complex transactions and disputes. Unlike (at least some) elected judges, they understand business disputes and are committed to quick resolution.
• The Business Court can provide businesses with a more predictable and consistent application of business laws and regulations than district courts. This would help parties with an early evaluation of the dispute’s risk profile and inform litigation strategy. Appeals from Business Court will also go exclusively to the new Fifteenth Court of Appeals, creating a specialized appellate path subject to the Texas Supreme Court’s jurisdiction.
• The Business Court has streamlined case management, with rules designed to move cases along quickly. A “Wheel of Mediation” provides judges and the parties with experienced mediators who can facilitate negotiated resolutions. And the Business Court’s rulings have shown that multiple parties can be joined in a single lawsuit governing the global project dispute.
• Business Court costs compare favorably to arbitration, where the parties pay fees and arbitrator compensation. Business Court thus offers the possibility of specialized jurists, which typically has been a distinguishing feature of arbitration.

The Business Court also differs from state district courts in explaining their rulings. Business Court judges must provide written opinions when a party requests one in connection with a dispositive ruling, or when the judge considers an issue important to the state’s jurisprudence. In this dynamic, the Texas Business Courts will function more like Federal District Court judges, who issue written opinions on the trial level, in contrast to our state district court judges, who are far less prolific in their written opinions. Numerous published opinions have already been issued, which will help form a new body of Texas business-law precedent.

Our lawyers who have appeared before the Business Court are positive about the quality of the judges and the streamlining of disputes. They report that the judges are seasoned jurists that are invested in ensuring the correct application of the law to the case and the timely adjudication of the case.

We continue to hear the debate. Some attorneys think a jury is the best factfinder, providing a wide range of perspectives to the dispute being tried before them, though critics question whether a jury can properly understand complex construction disputes. Other attorneys like arbitration because Texas arbitrators typically understand the industry and presentations can move faster. Of course, we are aware that some clients have had bad arbitration experiences and fear rogue arbitrators or the lack of any meaningful appeal.

It’s too early to tell whether the Texas Business Court offers a Goldilocks alternative, where everything is “just right.” But you might consult with your counsel about whether the 10 new sheriffs in town might be a good option for your business and included in your contract.

The one thing we can know for sure is that it’s better than the “Law West of the Pecos.”

Curt Martin and Lee Banta are both Board Certified in Construction Law by the Texas Board of Legal Specialization. They work in the Houston office of Peckar & Abramson.