As Texas prepares to inaugurate its business court on September 1, it stands at a pivotal juncture to learn from the experiences of other states. Nearly half of all US states have previously adopted various forms of chancery or business courts, designed specifically to handle civil business and commercial disputes. Key issues for Texas to consider include consent to jurisdiction, judicial term length, and obtaining feedback from litigants.
One area where insights from other states can prove valuable is the matter of consent to jurisdiction. For instance, Wyoming and Georgia both require universal consent from all parties before a case can proceed in their respective business courts. This requirement has led to dismissals in a notable percentage of cases, adding complexity and cost for litigants. In contrast, Texas will not require universal consent for its business court to exercise jurisdiction over certain cases, particularly those involving governance and commercial disputes valued at substantial sums.
Nonetheless, Texas may encounter similar hurdles with its supplemental jurisdiction rule, which allows related claims to proceed in the business court only if all parties and the judge consent. Historical data from other states indicates that consent is withheld around 25% of the time, potentially forcing litigants to pursue claims across multiple courts.
These insights draw from examples like Wyoming’s Chancery Court and Georgia’s State-wide Business Court. For a more detailed account, see a related here and here.
Another critical lesson pertains to judicial term lengths. The tenure of judges in business courts varies considerably among states, with the goal of ensuring continuity and stability in case management. For example, Delaware Chancery Court judges serve twelve-year terms, whereas Texas business court judges will have much shorter two-year appointments. Such brief terms could result in frequent judicial replacements mid-case, a scenario that complicates consistent case management.
Finally, Texas might benefit from adopting a feedback mechanism similar to Wisconsin’s. Wisconsin’s Commercial Docket Pilot Project, extended until 2024, utilizes surveys to gather feedback from attorneys on various aspects of case management and discovery disputes. The results, encapsulated in a 2020 progress report, offer insights that Texas could use to make data-driven improvements to its business court system.
While Texas’ new business court looks poised to bring greater efficiency to commercial litigation, learning from the experiences of other states will be crucial. Proactively addressing issues like consent to jurisdiction, the stability of judicial appointments, and incorporating feedback can significantly impact the court’s effectiveness from the outset.
For a more comprehensive analysis, you can refer to the original article on Bloomberg Law here.