Shares in the Irish software firm Datalex spiked higher yesterday when it announced that it had settled a $27 million (€23.07 million)legal action with customer PSA Inc.

The company, which develops technology that enables travel firms to offer internet transactions, settled the lawsuit by paying PSA Inc some €435,000.

Datalex said each company had also agreed to pay its own legal fees as part of the out-of-court settlement, which was finalised before a first scheduled court appearance in Los Angeles.

PSA Inc had alleged in its legal suit that Datalex had broken the terms of an existing software contract with the firm and engaged in unfair business practices. Datalex opposed the allegations made by PSA Inc, which emerged following a software licensing deal signed between the firms in 2000.

PSA Inc was in fact counter-suing Datalex, which had filed a lawsuit against PSA in July 2001, alleging breach of contract in an attempt to recoup fees for delivering a certain software contract.

But in a statement yesterday, Datalex said it had reached an out-of-court settlement with the firm. This is less than the offer we made at the outset of the dispute, two years ago, and less than the original licence fee, said Mr Neil Beck, Datalex chief executive.

Shares in Datalex jumped three cents to close at 57 cents on the Irish Stock Exchange.