NoCopyrightSounds v AEI Music: High Court orders £1.4 million interim payment in royalties dispute

The High Court has ordered AEI Music Limited to make an interim payment of £1.4 million to NoCopyrightSounds Limited, the music rights holder and YouTube channel operator, in a dispute over unpaid royalties running into millions of pounds.

Master Pester's judgement in the Business and Property Courts followed an application by NoCopyrightSounds ("NCS") under CPR r. 25.23(c) for an interim payment of £3 million, alongside a request for interim accounts that AEI agreed to provide during the hearing. NCS holds rights in a catalogue of music and sound recordings, which AEI and its co-defendant Featherstone Music Limited were authorised to exploit in return for a share of resulting revenue. AEI's parent company holds a 25.25 per cent shareholding in NCS.

The parties dispute which contractual arrangements governed their relationship, with NCS relying on a Distribution Agreement, a YouTube Agreement and a Publishing Agreement dating from 2017, while the defendants contend these were superseded by a later Heads of Agreement. The court noted this dispute did not affect the application before it, since it was common ground that the defendants were obliged to account to NCS for exploitation of the catalogue.

Correspondence before the court showed AEI repeatedly acknowledging a growing outstanding balance, from around £1 to £2 million in 2024 rising to figures exceeding £4 million by mid-2025. A witness statement from Diluk Dias, director of both defendants, filed after the hearing, confirmed a running balance in AEI's own accounts of just over US$6.1 million as at 31 March 2026, though he maintained this was subject to set-off and not immediately payable due to an alleged agreement to extend credit, waiver or estoppel.

AEI resisted the interim payment on several grounds, arguing the application was an abuse of process, amounted to an impermissible mini-trial, failed to meet the threshold test set out in HMRC v GKN Group [2012] EWCA Civ 57, and relied on unreliable figures. Master Pester rejected each of these in turn. The abuse of process argument failed because an earlier interim injunction granted by HHJ Jarman KC had been confined to the question of contractual termination and had expressly left the defendants' alternative defences, including estoppel, undecided. On the threshold test, the judgement found that references in NCS's evidence to a "likely" recovery were directed at quantifying the payment sought rather than casting doubt on NCS's underlying entitlement.

On the estoppel defence, the court accepted AEI's account of conversations between representatives of both companies in which an NCS director indicated there was "no rush" to repay the balance, but found that such statements could, at most, have suspended the obligation to pay rather than extinguished it, and that any suspensory effect had long since lapsed given the time elapsed and NCS's subsequent formal demand and issue of proceedings.

Calculating the appropriate sum, the court took the principal balance acknowledged by Mr Dias, deducted NCS's own estimate of AEI's counterclaims in the absence of any alternative figure from the defendants, and arrived at approximately £1.4 million, before interest. The judgement left the applicable interest rate for further submissions, noting a provisional view that the Late Payment of Commercial Debts (Interest) Act 1998 might not apply and that a commercial rate of around 2 per cent above base rate could instead be appropriate.