LONDON, Feb 27 (Reuters) - Music investor Hipgnosis Songs Fund cannot sue singer Barry Manilow in Britain in a dispute about a $1.5 million bonus payment, London's High Court ruled on Thursday, but the fund can continue its case for some allegedly unpaid royalties.

Hipgnosis last year brought a lawsuit in London against Manilow, 81, who just over two weeks later brought a separate case against Hipgnosis in Los Angeles, California.

The dispute centres on a $7.5 million deal signed in 2020 for Hipgnosis to buy the rights to Manilow's music catalogue, which includes hits such as "Mandy" and "Copacabana".

Under the agreement, Manilow was entitled to a further $750,000 if the revenue Hipgnosis received increased by 10% year-on-year for the first three years, with another $750,000 due if the increase was sustained over four years.

Hipgnosis sought a ruling in London that Manilow was not entitled to the $1.5 million and also for the payment of royalties paid by Sony Records to Manilow or his companies.

Manilow, however, argued the dispute over the $1.5 million should be heard in California, as his agreement with Hipgnosis allowed him to choose to sue in the U.S. about that issue.

Judge Marcus Smith ruled on Thursday that Hipgnosis and Manilow's deal gave Manilow the choice whether to sue in Britain or the U.S. about the additional $1.5 million.

He put Hipgnosis' case about the additional payments on hold, but allowed the parts of its lawsuit about allegedly unpaid royalties to continue in London.

Hipgnosis said the case concerned "a routine commercial matter concerning the interpretation of certain clauses in a contract regarding bonus payments".

A spokesperson said: "While we regret that this couldn't be resolved directly between the parties, we continue to hold Barry and his music in the highest possible regard, and we are confident that this can be resolved in a fair and reasonable way."

Manilow was not available for comment.

Hipgnosis, which owns the rights to music by artists such as Shakira and Red Hot Chili Peppers, was co-founded by music industry veteran Merck Mercuriadis, who has managed Elton John and Beyonce, and Chic's Nile Rodgers.

It was bought by Blackstone, the world's largest private equity firm, for nearly $1.6 billion last year.

(Reporting by Sam Tobin; Editing by Alex Richardson)

((Sam.Tobin@thomsonreuters.com;))