To be honest, I don’t understand the situation on site based on the photos.:
Up to the L-blocks is all your property? On the left a higher part of your garden, on the right your (OSB board) garage, behind that the house + garage (terracotta colored) of the neighbor? His property level is approximately at the level of the lower part of your property, or the higher? I thought he had dug himself in? The seepage water comes from the higher part of your property and flows more or less along the L-blocks, up to your garage - drainage outlet, etc.?
What somehow also causes me comprehension problems:
Background: my neighbor placed L-blocks (backwards) directly on the boundary and carried out an excavation. Behind that lies a drainage in a gravel bed on my property.
“Backwards on the boundary” would mean that more or less everything is on your side? So strictly speaking, the L-blocks and the drainage are yours. Whether you built it, the neighbor, or the Pope is irrelevant as long as the structure now stands on your property. Your garage also connects seamlessly to the L-blocks.
Reminds me of the refugee crisis: one country after another closed the borders, causing a backlog towards the south; in the end, the Greeks were the losers and negotiated the dirty Turkey deal via the EU. You would now have to protect yourself against the seepage water from above, then the future neighbor of the new development would have a lake in his garden. Then he’d do the same in return, etc.
Your current neighbor is actually off the hook and his willingness to cooperate is well meant.