The fund had to freeze about 58m of grants in July 2003 when it was counter-sued for damages by The Franklin Mint, a US company that sells memorabilia.
The case was launched after the fund, which claimed The Franklin Mint gave the impression that proceeds from its Diana products went to charity, tried unsuccessfully to sue the firm in 1998.
The case will reach court next month unless a settlement is agreed. The Franklin Mint is suing for 16m, which it has said it will give to charity.
Andrew Purkis, chief executive of the fund, said: "We are pleased that the damaging period of waiting will soon be over. We will work hard towards a settlement, but if one cannot be reached, we will go to trial."
Lucy Gampell, director of Action for Prisoners' Families, said the freeze forced it to scrap several youth projects.
"It seems a complete nonsense that it has dragged on for 15 months," she said. "There are no winners in this."
Greenwich and Lewisham Young People's Theatre, another project hit by the freeze, got another beneficiary to fill the funding gap.
