THE AUTHORS:
Julianne Jaquith, Partner at Quinn Emanuel
Natalia Salinas, Associate at Quinn Emanuel
Caroline Talbert, Associate at Quinn Emanuel
This article was featured in Jus Mundi‘s 2025 Arbitration Year in Review, an annual publication analyzing arbitration developments across 40+ jurisdictions on 6 continents. This edition brings together young practitioners and senior experts to capture the year’s most significant legislative reforms, enforcement trends, and institutional innovations.
Texas has become an increasingly popular destination for companies seeking a corporate-friendly environment. In fact, in 2024, 24 companies relocated their headquarters to the state, and data suggests that 2025 is maintaining the momentum: Elon Musk recently reincorporated both Tesla and SpaceX in Texas. Other companies, such as KFC and Realtor.com, announced relocations to Texas this year. State officials are actively encouraging this trend by publicly promoting Texas’s business-friendly regulatory and legal landscape. Supporting this push is the newly created Business Court of Texas, whose jurisdiction was recently expanded to include arbitration matters, including decisions on arbitrability and delegation to arbitrators.
The Business Court of Texas was created in 2024 as a statewide, specialized trial court to resolve complex business disputes. Texas Governor Greg Abbott, in a recent op-ed published in the Wall Street Journal, stated that the Texas Business Courts are intended “to specialize in corporate governance disputes, derivative actions and complex commercial transactions.” The Business Court is divided up into eleven administrative judicial regions, five of which are currently operational. These divisions are located in Dallas, Austin, San Antonio, Fort Worth, and Houston. The Judges appointed to the bench in the Texas Business Court are highly sophisticated practitioners, many with prior experience on the bench or in complex, high-stakes business litigation throughout their careers.
When it was initially founded just over a year ago, the Business Court had civil jurisdiction concurrent with district courts in several categories of cases where the amount in controversy exceeded $10 million, including derivative proceedings, corporate governance actions, securities claims, actions brought by an organization against an owner, actions for breach of fiduciary duty, and actions arising from the Texas Business Organizations Code. The Business Court also originally had jurisdiction over actions where the amount in controversy exceeded $10 million and the case arose from a transaction with an aggregate value of at least $10 million, the action arose out of a violation of the Texas Finance Code, or the action arose out of a contract in which the parties to the contract agreed that the business court has jurisdiction.
In 2025, Texas House Bill 40, which became effective as of September 1, 2025, significantly expanded the jurisdictional reach of the Business Court. The amount-in-controversy requirement was reduced across all jurisdictional categories to $5 million, the definition of “qualified transaction” was broadened to permit jurisdiction over a series of related transactions, and the Court’s jurisdiction was expanded to include intellectual property and trade secrets disputes. Most notably, however, the Court’s jurisdiction was also expanded to include arbitration-related matters: enforcement of arbitration agreements, appointment of arbitrators, and review of arbitral awards for disputes otherwise subject to the Court’s jurisdiction.
This development has significant implications for practitioners. The specialized bench benefits Texas business practitioners due to the Court’s efficiency, but the Court’s novelty—particularly regarding arbitration issues—creates some uncertainty about outcomes. Ultimately, parties in Texas commercial disputes now have an additional venue to raise and defend arbitral issues. The Texas Business Court is still developing its precedential body of caselaw, but recent opinions indicate that its judges rely heavily on Texas Supreme Court precedent for guidance (and do not regularly cite Texas lower court opinions). It is therefore likely that the Texas Business Court, when considering delegation and arbitrability issues, will look to recent Texas Supreme Court opinions as dispositive.
Delegation of Arbitrability in Texas: The Legal Landscape
Two recent Texas Supreme Court decisions have updated and clarified Texas caselaw on arbitrability and delegation. As practitioners may be aware, a contract with an arbitration clause does not insulate a dispute from court involvement. Courts are often asked to rule on the “arbitrability” of a dispute: the threshold question of whether that dispute is subject to arbitration (as opposed to the merits of the arbitration itself). Arbitrability includes two gateway questions:
- First, whether there is a valid arbitration agreement; and
- Second, whether the dispute falls within its scope.
Because arbitration clauses are a “matter of contract”, “parties can agree that arbitrators, rather than courts, must resolve disputes over the validity and scope of their arbitration agreement.” TotalEnergies E&P USA, Inc. v. MP Gulf of Mexico, LLC, 667 S.W.3d 694, 702 (Tex. 2023) (“Total Energies”), reh’g denied (June 9, 2023). This concept is known as “delegation,” which concerns whether the parties agreed that the arbitrator (instead of the court) will decide arbitrability.
The default rule, both in Texas and nationally, is that the court decides arbitrability, unless the parties clearly and unmistakably delegate that question to the arbitrator. Recent decisions from the Texas Supreme Court clarify what satisfies this “clear and unmistakable” standard. In TotalEnergies, the Texas Supreme Court addressed whether incorporating the American Arbitration Association (“AAA”) Rules (2013) into the arbitration agreement was “clear and unmistakable” evidence delegating arbitrability to the arbitrator. Id. at 708. Because the AAA Rules expressly grant arbitrators authority to decide their own jurisdiction, the court held that the incorporation of the AAA Rules is enough to constitute a valid delegation. Id. at 710–11. The approach in Total Energies shows that delegation does not need to be explicitly stated in the contract; incorporating rules that confer authority on arbitrators is enough to meet the “clear and unmistakable standard.”
The ruling in Total Energies brings Texas in line with the majority of state and federal courts who have considered this issue. Id. at 708. The Texas Supreme Court quoted the Delaware Supreme Court in noting that “adopting a widely held interpretation of the applicable rule benefits our State’s jurisprudence by promoting consistency and predictability, at least as long as that interpretation is not unreasonable.” Id. at 711 (quoting James & Jackson, LLC v. Willie Gary, LLC, 906 A.2d 76, 80 (Del. 2006) (internal quotation marks omitted)).
Nonetheless, even with broad delegation of arbitrability, parties may still find themselves in court, as delegation provisions can be subject to judicial challenge. In Lennar Homes of Texas Inc. v. Rafiei, 687 S.W.3d 726, 730–31 (“Lennar Homes”) (Tex. 2024), the Texas Supreme Court held that “when an agreement delegates arbitrability issues to an arbitrator” (such as where the AAA Rules are incorporated into the arbitration agreement) “it is for the arbitrator—not a court—to determine whether the arbitration agreement as a whole is unconscionable.” The court emphasized, however, that a party may still challenge the arbitration provision on unconscionability grounds if the “delegation provision itself is unconscionable.” Id. In Lennar Homes, the moving party argued that the arbitration agreement as a whole was unconscionable due to excessive costs. Because the moving party did not quantify the difference between the cost of litigating versus arbitrating and the party’s ability to afford the “former but not the latter,” the Court denied the unconscionability challenge and held that the question whether the arbitration provision as a whole is unconscionable “is reserved for the arbitrator under the parties’ delegation agreement.” Id. at 732-33. The ruling in Lennar Homes underscores that while delegation narrows the role of courts, it does not eliminate judicial oversight altogether. However, parties must present specific evidence to support any claim that a delegation provision is unconscionable (and therefore unenforceable).
What This Means For Arbitration Strategy in Texas Business Litigation
The evolving Texas Supreme Court framework on arbitrability and delegation, combined with the Business Courts’ newly expanded jurisdiction, has practical implications for how arbitration disputes should be approached in Texas. Now that the Business Court is authorized to hear arbitration-related matters, practitioners must consider whether the Texas Business Court is a desirable venue for resolving arbitration-related issues (for both pre- or post-arbitration award relief).
This shift also calls for careful drafting. Arbitration and corporate-governance agreements should anticipate possible Texas Business Court jurisdiction, especially where there are possible overlapping or conflicting venue choices, or in cases where parties may prefer a specialized bench.
Finally, as the Business Court develops its body of arbitration related decisions, practitioners should also continue to track the Texas Business Court’s evolving approach to arbitration, from practical application of recent precedent on arbitrability and delegation, through the final stages of award enforcement.
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ABOUT THE AUTHORS
Julianne Jaquith is a partner in Quinn Emanuel’s Houston and Washington, D.C. offices. Julianne represents clients in international arbitration, including investor-state disputes and international commercial arbitration, as well as complex cross-border litigation. Her experience spans many sectors, including energy, oil and gas, mining, telecommunications, and post-merger and acquisition disputes. She has experience with matters administered by ICSID and under other international arbitration rules, including UNCITRAL, ICDR/AAA, ICC, and JAMS.
Julianne has had a leading role in high-stakes investor-state and commercial arbitrations, as well as cross-border litigations. While her practice focuses on disputes involving Latin America, she has also handled disputes throughout the world. Clients frequently praise her diligence and professionalism, as well as her oral advocacy skills, leadership, and commitment to getting the best outcome. She is highly proficient in Spanish and frequently speaks and writes on arbitration-related topics.
Natalia Salinas is an Associate in Quinn Emanuel’s New York office, focusing on high-stakes international arbitration. She handles complex, multilingual commercial arbitrations involving cross-border contracts and disputes governed by major institutional rules, and has represented multinational companies in matters arising from contracts with foreign states. In addition to her arbitration work, she has experience in U.S. civil litigation. Natalia is fully bilingual in English and Spanish and dual-qualified in Mexico and New York, enabling her to navigate disputes across languages, jurisdictions, and legal systems.
Caroline Talbert is an Associate in Quinn Emanuel’s Houston office. She joined the firm in 2024 after clerking for the Honorable Andrew S. Hanen of the United States District Court for the Southern District of Texas. Caroline graduated from the University of Michigan Law School in 2023, where she was Managing Article Editor of the Michigan Journal of Gender & Law. While in law school, she served as a student attorney with the Veterans Legal Clinic, where she provided legal assistance to veterans in a variety of civil disputes. Her current practice focuses on complex commercial litigation.
*The views and opinions expressed by authors are theirs and do not necessarily reflect those of their organizations, employers, or Daily Jus, Jus Mundi, or Jus Connect.
* Any views expressed in this publication are strictly those of the authors and should not be attributed in any way to White & Case LLP.
