Michael Jackson’s planned appearance in a London courtroom to fight claims that he owes an Arab sheikh nearly £5 million was cancelled last night after the sides struck an eleventh hour deal.

Lawyers for Mr Jackson and Sheikh Abdulla bin Hamad Al Khalifa, the second son of the King of Bahrain, were locked in meetings late into the night to put the finishing touches to an agreement that allowed the singer to avoid giving evidence in London against a claim that he owed the sheikh more than $7 million.

Mr Jackson was scheduled to appear in court 73 of the High Court from 10am today, but a spokesman for the singer said: “As Mr Jackson was about to board his plane to London, he was advised by his legal team to postpone his travels since the parties had concluded a settlement in principle. Therefore he will not be attending court on Monday.”

The sheikh claimed that he helped to fund Mr Jackson’s defence against child molestation charges in California in 2005, paid for the star to live a life of luxury in Bahrain and shouldered significant fees for hiring staff and studios to record music.

It was claimed that Mr Jackson agreed to repay the money via royalties earned from the sale of songs written by the sheikh that he would perform, as well as by the sale of his autobiography and by a stage show. The court was told that the pair had a “close personal relationship”, but Mr Jackson reneged on the deal.

Robert Englehart, QC, representing Mr Jackson, applied initially for permission for the singer to give evidence via videolink from Los Angeles, claiming that he was suffering from an unspecified illness that made it difficult for him to travel. However, on Thursday they withdrew that application after medical reports showed that he was fit to fly.

Last week the court was told that Mr Jackson and the sheikh signed an agreement under which they would release music written by the sheikh under their jointly owned 2 Seas label.

One of the songs was to be He Who Makes the Sky Grey, written by the sheikh to be released as a charity single for the benefit of the victims of the 2004 Boxing Day tsunami.

Bankim Thanki, QC, for the sheikh, had told the judge, Mr Justice Sweeney, that he would hear a recording of the single. “It shows the quality of Sheikh Abdulla’s songwriting skills and that of Mr Jackson’s voice,” Mr Thanki said.

The court was told that the sheikh, who is also the Governor of the Southern Governorate of Bahrain and head of the country’s Public Commission for the Protection of Marine Resources, Environment and Wildlife, set Mr Jackson up with a recording studio at his Neverland ranch before sending him his compositions. He paid the singer $35,000 to cover bills at Neverland, before advancing $1 million at the request of one of Mr Jackson’s aides.

It was the sheikh’s claim that he made many more payments, including covering Mr Jackson’s $2.2 million legal bill after his criminal trial. Mr Jackson travelled to Bahrain as a guest of the sheikh after being acquitted of the molestation charges, but the court was told that the singer left the country in May 2006 to go to an awards ceremony and never returned.

The next month the sheikh was asked to sign a document releasing Mr Jackson from his obligations under the contract but he refused, Mr Thanki said. “My client felt a strong sense of personal betrayal because this was someone he considered a close personal friend.”

Mr Jackson said they had no agreement, that any money was a gift and the case was built upon “mistake, misrepresentation and undue influence”.

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