Microsoft and Samsung have agreed to settle a contract dispute in connection with the Korean handset maker's use of the Android operating system.

"Samsung and Microsoft are pleased to announce that they have ended their contract dispute in U.S. court as well as the ICC arbitration. Terms of the agreement are confidential," Samsung and Microsoft said on their official blogs.

The settlement removes a potential obstacle to greater cooperation between the two companies. It also ends Samsung's request for arbitration with the Hong Kong office of the International Court of Arbitration of the International Chamber of Commerce.

Microsoft filed a case against Samsung in New York in 2013, accusing the Galaxy-branded smartphone maker of breaching a collaboration agreement by initially refusing to make royalty payments. The dispute was also taken to the international arbitration court.

The lawsuit revolves around Microsoft's patents included in Google's Android operating system, which is used by a number manufacturers including Samsung. Manufacturers of handsets powered by Android are therefore required to pay royalty fees to Microsoft for each Android device they sell.

In August 2014, Microsoft accused that Samsung failed to make a royalty payment on time and later refused to pay interest on the late payment.

Samsung, on its part, has said that Microsoft's acquisition of Nokia resulted in breaching the agreement. The company claimed that it had issued royalty payments to Microsoft, albeit belatedly, and without interest.

Samsung has also stated that the devices made commercial by Microsoft, after its take-over of Nokia, are not liable to be covered under its agreement with Microsoft.