Lord Hardie said his inquiry must not rule on, and has no power to determine, any person’s civil or criminal liability - but “that does not mean that nobody will be prosecuted as a consequence of their involvement in the project”.
The former Lord Advocate is preparing to take evidence from councillors and members of the public affected by the years of disruption caused by the project, and has called for others to come forward.
He said the inquiry “is not merely an academic exercise” given City of Edinburgh Council’s indications that it may extend the line, and public co-operation is vital to enable him to make recommendations about future projects.
The trams were originally designed to run for 15 miles by 2011 at a cost of £375 million, but a truncated nine-mile service opened in 2014 at a cost of £776 million - with interest charges expected to push the final bill to around £1 billion.
The inquiry will investigate the delays, cost overruns, redesigns, delivery, governance, management, contract oversight and the consequence of the failure to deliver the project in full, on time and within budget.
Lord Hardie said: “Any question of prosecution will ultimately be a matter for the Lord Advocate and Crown Office and Procurator Fiscal Service (COPFS), and their decision will depend upon the availability of evidence supporting such a decision.
“As far as I am aware, neither the Lord Advocate nor COPFS has determined that nobody will be prosecuted.
“Indeed, it might seem to be premature to express such a view without considering the terms of the inquiry report which will be written after the conclusion of the evidence sessions in public.
“Furthermore, any question of civil liability must be determined by an appropriate court, having jurisdiction to do so.”
He said the inquiry is not prevented “from determining facts and making recommendations from which criminal and/or civil liability might be inferred”, and could offer “criticism of an individual, including inferred criticism, during the course of proceedings”.
He added: “Many of these issues, particularly the consequences of the failures mentioned above, involve the co-operation of members of the public, who had direct experience of them.
“That co-operation is essential if lessons about avoiding similar consequences can be learned and implemented for future projects of a similar nature.
“This is not merely an academic exercise.
“After local government elections in 2017, I understand that the City of Edinburgh Council may consider the possible extension of the tram line from York Place down Leith Walk and beyond.
“As I have explained previously, I am anxious to take into account the various consequences for the public during the tram project, particularly as any extension to the tram line in any direction will involve some disruption to the public during the construction phase, and it is desirable that the promoters of such an extension take into account the public’s past experiences to minimise that disruption.
“Without the co-operation of the public, where that is requested, the evidence available to me might not suffice to enable me to make recommendations about future projects.
“In that event, there will be less opportunity to learn from the experience of the project, and businesses and residents in Leith Walk and other areas may experience a repetition of past disruption should the tram line be extended to those areas.”