Trevor Rees-Jones gave evidence in Paris

Trevor Rees Jones had claimed Mr Al Fayed agreed in a memo, signed in September 1997, to pay for all his legal costs during the crash investigation.

But he told a county court in London, Harrods�s owner Mr Al Fayed reneged on that agreement and left him with a huge legal bill.

During a hearing at the West London County Court last October, the judge ruled that former paratrooper Mr Rees-Jones did have a case against his former employer and that he should answer the allegations in court.

Mohamed al-Fayed will appeal against the decision

Mr Al Fayed's legal team immediately sought leave to appeal against the judgment but Judge Peter Cowell refused the application.

Mr Rees-Jones, 30, of Oswestry, Shropshire, was Dodi Fayed's bodyguard at the time of the crash on August 31 1997 in Paris, which also killed driver Henri Paul.

On Friday though, the saga was brought to a close as the Central London County Court confirmed that the case had been settled out of court.

Mr Rees Jones's solicitors have refused to comment.