Reports that Elon Musk’s Terafab chipmaking project is headed to Grimes County, Texas, highlight a broader trend—Texas is attracting semiconductor, advanced computing, data center, and energy-related investments on a scale that is reshaping the state’s economic profile.
Terafab, a SpaceX project that has a potential total capital investment of $119 billion, is only the latest example. Samsung Electronics Co.'s $17 billion semiconductor plant under construction in Taylor, along with the steady expansion of advanced manufacturing and logistics infrastructure across the state, show how Texas has become a preferred location for capital-intensive, technology-driven industry.
Projects of that size predictably generate disputes over construction, supply, pricing, governance, and performance. The Texas Business Court reflects a recognition that such a large and complex economy needs a forum designed for those cases. And it addresses a familiar criticism from commercial litigants and their counsel: For complicated commercial disputes, Texas general civil courts aren’t the most attractive forum.
Delaware, New York, and arbitration often became alternatives. Arbitration has a particular limitation, though, in that arbitral panels don’t generate the public body of legal precedent that generates the predictability businesses need to evaluate risk and ground future agreements. Published opinions in Texas energy, infrastructure, and technology disputes matter beyond parties to the dispute because they can give companies and counsel guidance on recurring issues, making contract drafting and dispute outcome more predictable.
An economy of Texas’ size requires a dispute-resolution system that can handle the complexity of the transactions taking place. This need has become harder to ignore as Texas has attracted more projects involving layered financing structures; engineering, procurement, and construction contracts; utility arrangements; tax incentives; supply chain commitments; and long-term performance obligations.
When these projects go sideways, they can involve sometimes-opaque contractual obligations and benefits, construction delays, equipment failures, pricing disputes, governance disagreements, indemnity fights, service interruptions, and business continuity concerns.
The business court is specifically designed for handling these types of commercial disputes; it has jurisdiction over defined categories of commercial claims. This includes certain breach of fiduciary duty claims against officers and directors; governance disputes involving Texas entities; securities fraud claims; trade secret misappropriation; and large commercial contract disputes, generally subject to amount-in-controversy minimums of $5 million or $10 million depending on the claim type.
The enabling statute includes an opt-in mechanism for certain disputes, creating strategic flexibility for market participants, and statewide jurisdiction designed to reduce forum-shopping among local district courts.
Like federal judges, business court judges are appointed and have supporting law clerks. The court operates across multiple geographic divisions—Houston, Dallas, Austin, San Antonio, and Fort Worth—where many of these disputes arise. Business court decisions are appealable to a dedicated intermediate appellate court, the Fifteenth Court of Appeals, which sits in Austin and which will develop controlling Texas commercial law precedent over time.
One of the court’s attractive, non-legislated aspects is its approach to case management. The court seems uniformly willing to set tighter case schedules and to engage threshold issues earlier than parties often expect in general civil dockets. Discovery rulings appear to follow a federal approach, considering both the needs of the dispute and the burden of compliance.
Rather than issuing up or down rulings without explanation, business court judges produce written opinions that explain their reasoning. That matters because written decisions give parties and litigants clearer guidance on how similar issues will be treated in the future.
General civil courts, in contrast, manage sprawling dockets across many categories of civil disputes without the support of law clerks, which can make sustained focus on complex business disputes and the drafting of written decisions difficult. The business court’s limited jurisdiction aims to let judges devote sustained attention to a narrower category of high-value commercial cases.
Texas’ energy economy alone generates a large volume of disputes that fit naturally within a specialized commercial forum, including significant fights over joint operating agreements, midstream contracts, take-or-pay obligations, royalties, entity governance, force majeure, and post-closing liabilities. The energy transition is adding newer categories of disputes tied to renewables development, battery storage, and rights to connect to the energy grid. And data centers and advanced computing projects are likely to create an additional pipeline of cases.
Texas—particularly Dallas-Fort Worth, and increasingly Central and West Texas—is emerging as one of the country’s most important data center markets. Power purchase agreements and related commercial arrangements for hyperscale artificial intelligence data center projects can be sizable enough on their own to meet the court’s monetary threshold. Given the scale of these projects, disputes are likely to be high-value and fall squarely within the intended scope of the business court. As capital continues to flow into the data center market, these courts will become an increasingly important forum for resolving disputes that shape how projects are financed, developed and operated.
Compressed deal timelines, novel contractual structures, and growing tension between data center power demand and electricity grid constraints likely will generate disputes. Flashpoints may include development agreements, co-location arrangements, capacity commitments, equipment financing, construction contracts, joint venture governance, guaranteed power obligations, outage responsibility, and pricing-adjustment provisions.
Few jurisdictions have designed a commercial court able to address the types of disputes generated by their unique economies—but Texas has. The Texas Business Court is a predictable, efficient, sophisticated forum for resolution of Texas commercial disputes that supports the continued growth of a $2.9 trillion economy.
This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.
Author Information
Sean Gorman is a trial partner at White & Case, representing clients in high-risk and high-value disputes.
Interested in writing? Review our author guidelines, and submit pitches to Insights@bloombergindustry.com.