Choosing Your Business Court: What Texas’s New Business Court Means for Contracts and Strategy
When something goes wrong with your contract or business deal, where do you go to enforce your rights? The rise of business courts reflects growing competition between states to offer efficient forums that meet the needs of businesses to attract new businesses to their state and away from Delaware.
Texas has made a big splash with its new court system, but they are only the most recent entrant seeking to supplant Delaware. While its long-term success will depend on how the court handles early cases, between Texas’s new courts, Delaware’s deep body of precedent and New York’s procedural sophistication, companies now have more specialized options than ever before when choosing where to litigate and resolve disputes.
Texas Enters the Game
On September 1, 2024, Texas launched a new business court system to handle high-stakes commercial disputes. These courts can hear cases involving publicly traded companies, internal business issues like shareholder or leadership disputes when at least $5 million is at stake, and large contract disputes worth over $10 million, if the deal qualifies and the parties agree to use the court.
Importantly, Texas generally enforces choice-of-law and forum-selection clauses, meaning that businesses can agree to apply Texas law and resolve disputes in Texas courts, provided there is a sufficient connection to the state. Texas courts can also assert jurisdiction over out-of-state parties that do business in or have other meaningful connections to the state.
In addition, a new Texas statute gives companies even more control by allowing them to require that internal corporate disputes, such as those involving shareholders or directors, be filed only in Texas courts. This benefits companies by allowing them to resolve sensitive matters in a familiar and business-friendly legal environment, reducing the uncertainty and costs associated with out-of-state litigation.
How Other States Compare to Texas
Key Considerations for Businesses
As business courts continue to evolve, companies should keep the following strategic considerations in mind:
Conclusion
Companies should consider where they operate, where litigation is most likely to arise, and what their investors expect. Companies that prioritize efficiency and lower costs may benefit from newer courts like those in Texas, which are designed to move cases quickly and accommodate emerging industries. New York is also a strong option, particularly for companies that regularly handle large or complex commercial contracts, including those in technology, finance, or digital asset industries. However, businesses looking for legal certainty and investor reassurance may be better off going with Delaware, where there has historically been reliable precedent regarding corporate law and a long-standing reputation for stability that investors prefer.
Choosing the right court and governing law at the contract stage can save time, money, and uncertainty down the line. Companies and their counsel should stay alert to changes in jurisdictional rules, case law development, and procedural logistics. As states continue to innovate, the landscape of corporate litigation is becoming more competitive and more strategic.
Texas has made a big splash with its new court system, but they are only the most recent entrant seeking to supplant Delaware. While its long-term success will depend on how the court handles early cases, between Texas’s new courts, Delaware’s deep body of precedent and New York’s procedural sophistication, companies now have more specialized options than ever before when choosing where to litigate and resolve disputes.
Texas Enters the Game
On September 1, 2024, Texas launched a new business court system to handle high-stakes commercial disputes. These courts can hear cases involving publicly traded companies, internal business issues like shareholder or leadership disputes when at least $5 million is at stake, and large contract disputes worth over $10 million, if the deal qualifies and the parties agree to use the court.
Importantly, Texas generally enforces choice-of-law and forum-selection clauses, meaning that businesses can agree to apply Texas law and resolve disputes in Texas courts, provided there is a sufficient connection to the state. Texas courts can also assert jurisdiction over out-of-state parties that do business in or have other meaningful connections to the state.
In addition, a new Texas statute gives companies even more control by allowing them to require that internal corporate disputes, such as those involving shareholders or directors, be filed only in Texas courts. This benefits companies by allowing them to resolve sensitive matters in a familiar and business-friendly legal environment, reducing the uncertainty and costs associated with out-of-state litigation.
How Other States Compare to Texas
A. Delaware
The Delaware Court of Chancery, founded in 1792, is regarded by many as the most trusted court in the country for resolving complex corporate disputes. It hears high-stakes cases without jury trials. Delaware is popular with investors and boards because of its specialized judges and long history of precedent. Having a deep body of precedent gives parties comfort in uncertain situations, as it offers a level of predictability and guidance in how disputes are likely to be resolved based on how similar matters were resolved previously by the courts.
B. New York
The Commercial Division of the New York State Supreme Court, launched in 1995, is another major venue for resolving complex business disputes. Legislative changes in 2023 and 2024 have further modernized the system and strengthened its ability to handle certain types of technology and digital asset related disputes. With judges highly experienced in hearing and solving commercial disputes, the Commercial Division hears cases involving contract breaches, corporate governance, trade secrets and more.
C. Nevada and Wyoming
Nevada and Wyoming attract businesses with no corporate income tax, low fees and strong privacy protections. Nevada is known for shielding officers and directors from liability and offering minimal disclosure requirements. Wyoming stands out for its blockchain-friendly laws, making it popular with crypto and tech startups. However, their courts are less established for handling complex corporate disputes compared to Delaware or New York.
The Delaware Court of Chancery, founded in 1792, is regarded by many as the most trusted court in the country for resolving complex corporate disputes. It hears high-stakes cases without jury trials. Delaware is popular with investors and boards because of its specialized judges and long history of precedent. Having a deep body of precedent gives parties comfort in uncertain situations, as it offers a level of predictability and guidance in how disputes are likely to be resolved based on how similar matters were resolved previously by the courts.
B. New York
The Commercial Division of the New York State Supreme Court, launched in 1995, is another major venue for resolving complex business disputes. Legislative changes in 2023 and 2024 have further modernized the system and strengthened its ability to handle certain types of technology and digital asset related disputes. With judges highly experienced in hearing and solving commercial disputes, the Commercial Division hears cases involving contract breaches, corporate governance, trade secrets and more.
C. Nevada and Wyoming
Nevada and Wyoming attract businesses with no corporate income tax, low fees and strong privacy protections. Nevada is known for shielding officers and directors from liability and offering minimal disclosure requirements. Wyoming stands out for its blockchain-friendly laws, making it popular with crypto and tech startups. However, their courts are less established for handling complex corporate disputes compared to Delaware or New York.
Key Considerations for Businesses
As business courts continue to evolve, companies should keep the following strategic considerations in mind:
1. Jurisdictional Scope – When Can You Choose Each Court?
Each state’s business court has its own focus. Delaware uses a special kind of court, referred to as an equity court, which focuses on fairness and is known for handling company leadership and ownership issues. New York takes on a broader range of commercial cases and may be a better fit for disputes relating to certain types of technology and digital assets. Texas handles major business disputes involving large sums of money or complex deals. It’s important for founders and general counsel to understand these differences before deciding where to resolve disputes or how to draft and negotiate choice of law and venue provisions in contracts.
Delaware courts generally apply Delaware law to internal company disputes, even if the business operates elsewhere. Companies have the option to choose Delaware governing law and a Delaware forum where total contract value is at least $100,000, even if the contract has no other connection to Delaware.
Companies can select New York governing law for contracts worth $250,000 or more or choose New York courts as a venue for contracts worth at least $1 million, even if the deal has no other connection to the state.
Beginning in 2025, Texas business courts have jurisdiction over internal corporate and commercial disputes involving at least $5 million. This new threshold replaces the original $10 million minimum for contract cases under the 2024 law. Texas courts generally respect contracts that name Texas law or courts, as long as the choice is reasonable and agreed to by both sides.
2. Who decides? Jury vs. Judge
Procedural differences between states can play a big role in shaping how a legal strategy is developed. Delaware resolves business disputes through judges only—there are no juries involved. On the other hand, Texas and New York allow for jury trials in many cases. This distinction can significantly affect how a case is argued, how long it takes, and even the potential outcome. Depending on the nature of the dispute, whether it’s technical, emotional, or involves public perception, parties may prefer one process over the other.
3. Judicial Experience and Consistency
Business courts typically offer judges with subject-matter expertise, increasing the predictability of rulings. In Delaware, judges are selected based on experience and must be approved by both the governor and state senate, helping ensure political neutrality. In New York, Commercial Division justices are selected from the Supreme Court bench based on their commercial litigation experience. Texas takes a different route: judges are appointed directly by the governor but must have at least 10 years of relevant business law experience under state law. For businesses, the background and approach of the judges handling the matter can significantly shape the outcome.
Each state’s business court has its own focus. Delaware uses a special kind of court, referred to as an equity court, which focuses on fairness and is known for handling company leadership and ownership issues. New York takes on a broader range of commercial cases and may be a better fit for disputes relating to certain types of technology and digital assets. Texas handles major business disputes involving large sums of money or complex deals. It’s important for founders and general counsel to understand these differences before deciding where to resolve disputes or how to draft and negotiate choice of law and venue provisions in contracts.
Delaware courts generally apply Delaware law to internal company disputes, even if the business operates elsewhere. Companies have the option to choose Delaware governing law and a Delaware forum where total contract value is at least $100,000, even if the contract has no other connection to Delaware.
Companies can select New York governing law for contracts worth $250,000 or more or choose New York courts as a venue for contracts worth at least $1 million, even if the deal has no other connection to the state.
Beginning in 2025, Texas business courts have jurisdiction over internal corporate and commercial disputes involving at least $5 million. This new threshold replaces the original $10 million minimum for contract cases under the 2024 law. Texas courts generally respect contracts that name Texas law or courts, as long as the choice is reasonable and agreed to by both sides.
2. Who decides? Jury vs. Judge
Procedural differences between states can play a big role in shaping how a legal strategy is developed. Delaware resolves business disputes through judges only—there are no juries involved. On the other hand, Texas and New York allow for jury trials in many cases. This distinction can significantly affect how a case is argued, how long it takes, and even the potential outcome. Depending on the nature of the dispute, whether it’s technical, emotional, or involves public perception, parties may prefer one process over the other.
3. Judicial Experience and Consistency
Business courts typically offer judges with subject-matter expertise, increasing the predictability of rulings. In Delaware, judges are selected based on experience and must be approved by both the governor and state senate, helping ensure political neutrality. In New York, Commercial Division justices are selected from the Supreme Court bench based on their commercial litigation experience. Texas takes a different route: judges are appointed directly by the governor but must have at least 10 years of relevant business law experience under state law. For businesses, the background and approach of the judges handling the matter can significantly shape the outcome.
Conclusion
Companies should consider where they operate, where litigation is most likely to arise, and what their investors expect. Companies that prioritize efficiency and lower costs may benefit from newer courts like those in Texas, which are designed to move cases quickly and accommodate emerging industries. New York is also a strong option, particularly for companies that regularly handle large or complex commercial contracts, including those in technology, finance, or digital asset industries. However, businesses looking for legal certainty and investor reassurance may be better off going with Delaware, where there has historically been reliable precedent regarding corporate law and a long-standing reputation for stability that investors prefer.
Choosing the right court and governing law at the contract stage can save time, money, and uncertainty down the line. Companies and their counsel should stay alert to changes in jurisdictional rules, case law development, and procedural logistics. As states continue to innovate, the landscape of corporate litigation is becoming more competitive and more strategic.