Michael Jackson Settles Out of Court with Sheik

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Hamad Mohammed / Reuters

Michael Jackson, left, wearing an abaya, a traditional women's veil and gown, on a visit to Bahrain in 2006

Michael Jackson avoided a much-anticipated appearance in London's High Court by reaching an out-of-court settlement with Sheik Abdulla bin Hamad Al Khalifa, the prince of Bahrain, who was suing him for $7 million.

"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," Celina Aponte, Jackson's London-based spokeswoman, said late on Sunday. (See pictures of Michael Jackson at 50.)

Jackson was scheduled to testify this morning. The reclusive pop star originally asked to appear by video link from Los Angeles, citing an unspecified illness, but agreed to travel after doctors gave him the all clear. Court officials anticipated so much interest in Jackson's appearance that they took the unusual step of issuing admission tickets to media outlets that hoped to cover the case.

The courtroom thriller began last Thursday. Al Khalifa, 33, testified that Jackson, 50, reneged on a contract for a new album, an autobiography and a stage play after accepting millions of dollars in advances. The sheik said that in addition to covering Jacko's living and travel expenses during his year-long stay in Bahrain, he built the singer a recording studio, spent more than $300,000 securing him a "motivational guru" and gave him $250,000 in cash so Jackson "could entertain his friends at Christmas." Jackson has maintained that these were gifts from the Arab prince, an interpretation Al Khalifa denies. "Many times he confirmed that he would pay me back," the sheik said. (Read "Celebrity Worship: Good for Your Health?")

The two men's lives became intertwined in June 2005 after Jackson was cleared of charges that he molested a 13-year-old boy in California. That trial left Jackson, once one of the world's wealthiest entertainers, in financial tatters. Al Khalifa offered Jackson refuge in his oil-rich Gulf state and, the sheik's lawyer said, footed Jackson's $2.2 million legal bill.

Al Khalifa, who fancies himself an amateur songwriter, also said the two men moved into the same palace to collaborate on music together.

In court on Thursday, Jackson's lawyers argued that the sheik's case was based on "mistake, misrepresentation and undue influence" and in their defense planned to demonstrate that Al Khalifa exploited Jackson's vulnerability and lack of business sense. (See the top 10 Michael Jackson moments.)

"Michael is an individual who is very switched-on," Al Khalifa told the court. "He is a fantastic intellectual."

"There's nothing unusual about him?" asked Robert Englehart, Jackson's attorney.

"No," Al Khalifa said.

History suggests otherwise. Last week, Jackson defaulted on the $23.5 million he owes for Neverland, the ranch he bought in 1988 and named after the mythical realm of Peter Pan, the boy who never grew up. Jackson has said the ranch was intended to recreate the magical childhood experiences that stardom denied him. "It's like stepping into Oz," he once said. "Once you come in the gates, the outside world does not exist."

The defense also called upon Grace Rwaramba, nanny to Jackson's three children, to demonstrate that the sheik was a generous benefactor who was eager to lavish Jacko with gifts.

"He would say, 'What can I do for my brother? What can I give the children?' " Rwaramba said. She also testified that she was "flabbergasted" when the sheik wired her $35,000 because Jackson was so broke that he did not even have a bank account. She claims the sheik apologized for what he considered a paltry sum of money and said that "next time it would be more." Jackson reportedly used the money to pay his utility bills at Neverland.

In the face of his financial and legal battles, Jackson has reportedly made moves to find peace by converting to Islam, according to British tabloid the Sun. It reports that ahead of the court case last week, Jackson went through the shahada, the Muslim declaration of belief, in the Hollywood Hills home of Steve Porcaro, the man who composed music on Jackson's Thriller album. Jackson has reportedly taken the name of Mikaeel, one of Allah's angels.

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Watch TIME's video "Appreciating Michael Jackson, the Musician."