The council had originally sought £200 million in damages, alleging “negligent legal advice” given to TIE, the arms-length company responsible for delivering the scheme.

Legal proceedings were paused while former judge Lord Hardie conducted a public inquiry into the delayed and over-budget project, before resuming after publication of his report in September 2023. The case had been scheduled to go to court in March.

A report due before councillors next week states: “The litigation against DLA Piper Scotland LLP was resolved out of court in March 2026.”

The council said the terms of the settlement prevent details being disclosed.

The same report also confirms that an internal investigation by the council’s monitoring officer upheld criticisms made by Lord Hardie, concluding the authority had been guilty of maladministration.

Lord Hardie’s inquiry into the £776m tram scheme blamed the council, TIE and the Scottish government for a “litany of avoidable failures” that led to delays, cost overruns and a reduced project scope.

The monitoring officer’s report said: “The deputy monitoring officer has reviewed the Edinburgh Tram Inquiry Report and agrees with Lord Hardie that the council failed in a number of important respects to properly oversee the project – this contributed to the project being delivered late, at an increased cost and with a restricted scope”.

It added: “There were serious and systemic failings on the part of the council which, overall, could be described as organisational incompetence.”

Council leader Jane Meagher said: “We’ve long recognised that mistakes were made on the first tram project and apologised for the impact this had on Edinburgh’s residents and businesses.

“As a result of this, we made significant changes to project management, governance and independent oversight across the organisation, drawing on lessons from the original project and the findings of Lord Hardie’s inquiry.

“The successful delivery of the Trams to Newhaven project in 2023, which came in on time and on budget, clearly demonstrates that we’ve learned these lessons. Passenger numbers have grown year on year, reaching 12.5 million passenger journeys in 2025, and last August setting a new monthly record of almost 1.5 million.

“One thing we won’t apologise for, however, is building a tram system, or our ambition to develop it further. Edinburgh is Scotland’s capital and economic powerhouse – the fastest growing city in the country, and recently overtaking London on GDP per head.”