Their lawyer, Francois Membrez, said in a statement that the decision to drop charges against the son of the Libyan leader was 'free' and 'considered,' and had been taken following hefty compensation from the Qaddafis.
The plaintiffs, from Tunisia and Morocco, have also received temporary Swiss residency permits.
Alain Berger, the lawyer representing the Qaddafis, said however he had not yet received official notification of the decision, but added that "if it is true, it is excellent news."
Hannibal Qaddafi, 32, was arrested in Geneva on July 15 over allegations that he and his expectant wife, Aline, had beaten the hotel employees with a belt and a coat hanger in the five star hotel. Hannibal subsequently spent two days in police custody while his wife was kept under police supervision in a clinic in Geneva.
They were later released on bail and left Geneva, but the arrest triggered a diplomatic row between the two countries. The crisis resulted in a halt in oil deliveries to Switzerland and the recall of Tripoli's diplomatic representatives as Libya demanded that the charges be dropped.
Hannibal, the second and youngest son of the Libyan leader, has frequently made headlines in Europe for all the wrong reasons.
In 2001, his diplomatic status enabled him to leave Rome after attacking three Italian policemen with a fire extinguisher in his hotel.
In September 2004, his bodyguard was arrested for attacking police in Paris after Qaddafi was stopped for driving 140 kmph (90 mph) through red lights on the wrong side of the Champs Elysees while drunk. The guard was given a suspended sentence of a month and a 1,500-euro ($2,300) fine, Qaddafi was not detained due to his diplomatic status.
Several months later, he was given a four-month suspended sentence and a 500-euro ($800) fine after beating up his 24 year-old female companion when she refused him access to a room at the InterContinental hotel in Paris. Later in the day, he broke furniture in another hotel and threatened police with a gun.
