Georgia’s new business court started taking its first cases in August and has potential to become the preferred route of businesses looking to resolve a variety of disputes under state law.
Georgia voters amended the state constitution two years ago to create the court, which the Georgia Chamber of Commerce says will benefit businesses with its predictability, speed, and case management.
In fact, many businesses may immediately view it as a strong alternative for resolving disputes for this simple reason: it does not have a backlog. Georgia’s trial courts have significant backlogs affecting thousands of cases due to the slowing or outright stopping of proceedings during the coronavirus pandemic. However, as of Oct. 1, only nine cases have been filed in the Georgia Business Court.
Requirements for Georgia Business Court
Seventeen types of disputes under state law are eligible for the Georgia State-Wide Business Court, including those involving trade secrets, breaches of contract, commercial real estate, arbitration, and intellectual property licensing.
Damages in dispute must be at least $1 million for commercial real estate or $500,000 for all the other categories. Some litigators expect these minimums to result in the inflation of damages—in particular with commercial real estate—in certain cases where businesses prefer a venue that better understands their dispute and has time to devote to complex matters.
Another requirement is that both parties must consent to having their case heard in business court. Considering the average business’s distaste for uncertainty and protracted legal battles, getting both parties to consent will likely be less of a challenge while the backlogs persist in the state’s other courts.
That said, some businesses in south Georgia, for example, may not necessarily be excited about litigating a case in Atlanta, where the business court sits. In addition to fears that bigger businesses in Atlanta may have some kind of home court advantage, some business owners have raised concerns about steep rates for attorneys within the metro Atlanta area compared to lawyers working in smaller parts of the state.
Perhaps the biggest challenge facing parties will be obtaining the necessary consents to obtain jurisdiction in the Business Court in the first instance. The process and procedures are not anticipated to be much different, but the parties still must qualify and agree before they can obtain the advantages of being in Business Court.
Lessons Learned from North Carolina
The 1990s saw the first wave of business courts created outside of Delaware, where the Court of Chancery—which many litigators consider the original business court—has existed since 1792. North Carolina was part of that small wave in the 1990s, joining New York, Illinois, and New Jersey in creating some form of a business court.
Today, about half of all states “have some type of specialized business court or commercial docket as a feature of their judicial systems,” according to the American Bar Association. While the details vary, the ABA notes the most consistent thread “is a single specialist judge for a single case from beginning to end.”
That feature’s consistency today is due in part to its success in North Carolina, whose business court has become a model for how these courts can work well for clients and litigators.
Georgia businesses already benefit across the state’s trial courts from working with the same judge throughout a case. That will continue with the Georgia Business Court, except the plan is for its judges to only handle business cases. As a result, Georgia is likely over time to share one of the biggest positives from North Carolina’s experience: having judges who are well-versed in complex business disputes.
The benefits of working with one judge well-versed in complex business disputes include more consistent outcomes and potentially faster resolutions when the judge has institutional knowledge of similar cases.
North Carolina’s business court provides another positive for parties—it requires judges to issue written orders on motions. That is a beneficial aspect of the court that Georgia did not include in its proposed rules for the business court, which were published in May.
With written orders, businesses know how the judges have ruled on similar cases and issues, leading to better predictability and well-thought-out rulings. Georgia’s rules have not been finalized yet, so there is a possibility that provision could be added. (For now, the court is working under an interim Georgia Supreme Court order that the Uniform Superior Court Rules will apply.)
Considerations Before Using Business Court
While the benefits described above are likely to play out over time, the Georgia Business Court currently has just one judge and hasn’t finished hearing a single case. Some businesses may prefer to wait and see how the court performs in its first year or so before deciding to use it.
For businesses not ready to use the court and trying to avoid the state court backlog, going to arbitration can be an excellent alternative. The American Arbitration Association and the International Centre for Dispute Resolution have been adapting to the pandemic with remote hearings and maintaining accelerated timelines.
This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.