The Rehab group has dropped a High Court claim against the State for up to €1.5 billion in damages over the operation of National Lottery.

The development follows the appointment of a new board at Rehab after months of turmoil in which the disabilities group found itself in conflict with both the Government and the Public Accounts Committee.

Rehab was under the command of former chief executive Angela Kerins when it took the action under competition law for damages last year, claiming the National Lottery’s dominant market position gave it an unfair advantage over rivals.

Former minister for justice Alan Shatter had criticised Rehab over the litigation, saying in the Dáil the “costly” action was likely to exert a significant burden on either public resources, charity resources or both.

With Ms Kerins’s successor Mo Flynn to take office in January, the group has indicated to the court the case has halted.

“With regard to the competition case Rehab had taken in respect of its lottery activity, the proceedings have now been settled between Rehab and the State,” a Rehab spokesman said. “ . . . The court made an order on consent striking out the proceedings with no order as to costs.”

The case was one of two actions Rehab had taken against the State. Rehab lost the first case in June, when the High Court ruled against its challenge to the elimination of a State scheme which provided €120 million to lotteries operated by charities since 1997.

Mr Shatter had said the scheme incentivised inefficient fundraising. Ms Kerins, who resigned in April, has filed a separate High Court action for compensation arising from the PAC investigation into the group.