Jee Jing Hang, who operated an Internet business, was one of 239 passengers onboard the aircraft enroute from Kuala Lumpur to Beijing when it vanished on March 8 last year.
On behalf of his two young sons, Jee's family brought a lawsuit against Malaysia Airlines last October for breach of contract, as it failed to bring its passengers to its destination.
The family also brought claims against the Malaysian government, the Department of Civil Aviation, the Immigration department and the air force for negligence.
He added that terms of the settlement could not be disclosed.
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Meanwhile, a Malaysian lawyer N Surendran told AFP that the out-of-court settlement could "trigger other affected family members to pursue similar legal actions."
An Australian-led team is scouring the southern Indian Ocean seabed in hope of finding the final resting place of MH370.
No wreckage from the flight has ever been found in one of aviation's greatest mysteries.
Four months after MH370's incident, Flight MH17 was blown out of the sky, killing all 298 aboard, by a suspected ground-to-air missile over Ukraine.