FORT WORTH, Texas — This story was originally published by our partners at the Dallas Business Journal. You can read the original version here.
A new system for settling business disputes started as the state's business courts and the 15th Court of Appeals opened Sept. 1.
Lawmakers passed House Bill 19 last year, and Gov. Greg Abbott appointed 10 judges across the state to hear business disputes involving more than $5 million. Five districts went live Sept. 1: Fort Worth, Dallas, Austin, Houston and San Antonio. Each of the districts will have two assigned judges with two-year appointments. In total, there will be 11 districts, according to the Texas Business Court website.
Robert Ahdieh, dean of Texas A&M's School of Law and CEO of Texas A&M Fort Worth, said the court room and chambers for the Fort Worth division will be at the university's law school in its current building downtown, and eventually, the new Texas A&M Fort Worth campus.
Part of the effort to establish a specialized business court is for business attraction to the state, Ahdieh said. CEOs can establish their headquarters, factories and their locations where they choose. Companies can also choose a place of incorporation, and most choose Delaware because the state has a historically high quality of judges and courts to decide corporate law and other business disputes, Ahdieh said.
Examples of cases that could be heard in the new Texas courts are related to corporate law, such as breach of fiduciary duty disputes or shareholder questions related to the legitimacy of a hostile takeover or a proposed merger. Cases such as bankruptcies will still be heard in federal court, Ahdieh said.
The idea is that having judges who have specialized knowledge and expertise in business law will yield more predictable law that is conducive to growth and economic growth and development, Ahdieh said. About half of the country's states have some form of business court.
"The notion is that we want to attract more incorporations by companies in Texas and the one way you do that is you point to, when you have a dispute, that dispute will be heard by judges who are expert and knowledgeable and trained," he said.
The establishment of the new courts also may speed the process of getting a case heard by a judge, Ahdieh said. Cases filed in the business courts won't have to wait in line in the general courts.
FBFK Law's Dana Campbell said questions remain surrounding the business courts. For one, there is no intermediate court of appeals precedent that governs the business court. That could mean businesses choose a state with more years of precedent to make decisions, said Campbell, who chairs the Plano-based law firm's litigation section.
"I'm not criticizing anyone here or challenging the competency of anyone here," he said. "I'm simply saying, if you're looking for predictability, is that the court you're going to choose? I don't know. This is just a fascinating question to see how business will respond to that."
Campbell also notes that judges in the court are appointed or reappointed every two years, while in federal court judges have lifetime tenure. If a judge leaves in the middle of a case, that could be disruptive to companies involved in disputes.
"It's human nature — the new judge sees things in the case somewhat differently, and it's not ideal," Campbell said. "I don't know that there's a good answer to this issue, but it certainly does make, in some respects, federal court more attractive."
Campbell also said it will cost $2,500 to file a case in Texas' business court. He said it will take time to see whether the courts gain traction — but he'll be looking at the filings as they open this week.
