Graham Rix was seeking �444,175 from his former employer

Mr Rix was seeking �444,175 from his former employer following his dismissal from the post in March 2006.

But on the eve of the scheduled start of his case on Tuesday at the Court of Session in Edinburgh a settlement has been reached.

He was due to give evidence and Hearts majority shareholder, Vladimir Romanov, was thought to be a witness.

The case was expected to last eight days in a commercial action before Lord Reed.

Confidential information

Mr Rix was appointed as successor to George Burley as manager at Hearts on a salary of �350,000 a year and his contract ran until 31 July last year.

He maintained that his sacking by the Tynecastle club was not justified and he was due damages for breach of contract.

Hearts claimed that the dismissal was justified and had contested the action.

The club maintained that he breached conditions of his contract. Before a game against Dundee United he told the players that the team had been selected by Mr Romanov.

Hearts claimed that he disclosed and misrepresented confidential information. He blamed his comments for undermining team morale.