The conundrum of undistributed residues under the United Kingdom’s collective proceedings regime

As it nears its first decade of existence, the UK’s opt-out collective proceedings regime is starting to give rise to a very particular conundrum as cases wend their way to judgment or settlement – the appropriate destination of undistributed residues. Whether an award of aggregate damages or global settlement sum is reached, not all class members may come forward to claim their individual compensation. Alternatively, it may not be feasible to distribute individual compensation to the class members directly. In those circumstances, a very considerable undistributed residue may arise. Although the UK legislature has ostensibly sought to stipulate what occurs to residues in the case of judgments, and has left it to the litigants to resolve in the case of settlements, that clear-cut division has been ‘muddied’ somewhat by recent and important appellate dicta. Moreover, there are several destinations to which undistributed residues may be transferred – some of them controversial. It is suggested that the ‘guiding light’ of any such distribution should be the compensation of the non-claiming class members via indirect means (including cy-près and escheat distributions), failing which compensation to the claiming class members, the funders of the action, or a reversionary distribution to the defendant, will be appropriate.