Sir Martin Sorrell, chief executive of the advertising group WPP, has been spared a potentially uncomfortable appearance in a High Court witness box after settling a long-running legal battle with an Italian colleague.

The confidential agreement, announced on Tuesday, draws the acrimonious - and at times deeply personal - litigation between Sir Martin and Marco Benatti, the former head of WPP's Italian operations, to a close in both the UK and Italy.

The bad blood between the two men dates back to 2006, when Mr Benatti was sacked from WPP. He claims he was the victim of a spectacular falling out with Daniela Weber, the chief operating officer of the company's Italian business and a close friend of Sir Martin. The advertising magnate, by contrast, claimed Mr Benatti was using WPP acquisitions to line his own pockets.

The tabloid-like chain of events that ensued included the circulation of a now-infamous characterisation of Sir Martin and Ms Weber as "the mad dwarf and the nympho schizo'' and a series of blog postings falsely linking the WPP chief to money laundering and other financial misdeeds.

Sir Martin and Ms Weber settled a separate defamation lawsuit against Mr Benatti and Marco Tinelli, another executive, over the web postings last year for a total of £150,000, without any admission of liability by the Italians.

At the time, Mr Sorrell described the blogs as a "vengeful and vindictive'' attempt to undermine his professional reputation.

The lawsuit, concluded on Tuesday, centred on separate allegations that Mr Benatti failed to disclose that he held a substantial personal stake in MediaClub, an Italian agency acquired by WPP in 2002.

WPP was seeking more than €16m (£12.5m, $21.7m) in damages over Mr Benatti's alleged deception and "secret'' profit-skimming.

Mr Benatti denied wrongdoing and was pursuing a counterclaim for unfair dismissal. Sir Martin had been due to testify on Monday.

"WPP and Marco Benatti have agreed to a full and final settlement of the disputes between them, which are the subject of the proceedings currently before the English High Court and related proceedings in Italy,'' the parties said in a joint statement.

Sources close to the case said it was hoped that the settlement would allow both men to move forward with an unrelated business venture, the Italian advertising agency Fullsix.