Italy's Finmeccanica and the government of Panama reached a settlement on Wednesday that ends contract disputes between them.

The disputes revolve around three contracts awarded under an Italian and Panama government deal in 2010 to Selex ES -- now part of Finmeccanica -- and Telespazio, which Finmeccania co-owns with Thales.

Together with another contract allocated to AgustaWestland, which is now also part of Finmeccanica, the companies were to provide Panama with an integrated coastal surveillance system.

Last year Panama's new government asked the country's Supreme Court to cancel the $125 million deal, citing corruption concerns and inappropriate Selex ES radars.

"The settlement reached by the Republic of Panama and Finmeccanica involves an extension to the original contract allocated to Telespazio for a digital mapping system for Panama, as well as the consensual termination of the contract allocated to Selex ES for a radar surveillance system, in relation to which the Republic of Panama will have the right to purchase helicopters or other equipment from Finmeccanica," the Italian company said Wednesday.

"The decision of the Republic of Panama government is not related to the quality of the radar systems supplied by Selex ES, but stems from a separate reassessment of the overall surveillance system for the country's coastal area."

Also under the settlement, Finmeccanica will provide an AgustaWestland helicopter ambulance, free of charge, to the Republic of Panama. Panama promises to withdraw the disputes from the Supreme Court of Panama, request their termination, and re-launch business relationships with Finmeccanica.