C and D were both members of a trade association company. Articles of association stated that ‘trade disputes’ should be submitted to arbitration. Dispute between two members arose as to a transaction between them; one of pair refused to submit to arbitration and sued. D sought to have court case stayed. Held:
· No rights of action can arise under articles in relation to matters which arise outside the ‘company relationship’
· Matter under dispute was a commercial trading transaction
Ø Thus transaction had nothing to do with C and D’s membership of company.
· Thus article could not be enforced against C.