U.S. judge recommends returning treasure to Spain

MIAMI (Reuters) - A U.S. judge said a shipwreck found by an American treasure hunting company is the Spanish warship Mercedes and its loot should be returned to Spain, but his decision is not binding and the firm said on Thursday it would appeal.

The recommendations issued on Wednesday by a magistrate judge in Tampa, Florida, marked the latest step in a lengthy battle between the treasure hunters, Odyssey Marine Exploration Inc, and the governments of Spain and Peru over nearly 600,000 silver and gold coins valued at some $500 million.

The Spanish government hailed the decision from Magistrate Mark Pizzo, which called for the treasure to be returned to Spain within 10 days. But it was simply a recommendation to a U.S. district court judge, who will issue a final order.

"I am delighted that the judge has ruled that the ship belongs to Spain and the treasure belongs to Spain. It is a very important decision," Spanish Culture Minister Angeles Gonzalez-Sinde told Spanish television, adding that it set an important precedent.

Odyssey's shares plunged more than 40 percent on Thursday and were trading at around $2.25 by early afternoon.

Odyssey discovered wreckage and a 17-tonne haul of artifacts in March 2007 in international waters about 100 miles west of the Straits of Gibraltar.

Spain said the coins came from the "Nuestra Senora de las Mercedes," a frigate carrying treasure back from Peru when it was sunk by British gunboats off the Spanish coast in 1804.

Spain claimed the loot as its own, but not before Odyssey flew the treasure from the British colony of Gibraltar to Florida.

The Mercedes sank in the first few minutes of the Battle of Cape St. Mary's as an explosion ripped it apart, killing more than 200 sailors aboard. The attack led Spain to declare war on Britain and enter the Napoleonic Wars on the side of France.

Pizzo said in his report on the case that there was solid evidence the wreckage was that of the Mercedes, as Spain argued.

"The debris field's location, coins, cannons and artifacts persuasively match the Mercedes historical record," he wrote.

He said the Tampa court did not have jurisdiction in the case and recommended that the artifacts should be returned to Spain.

Odyssey, which had code-named its secret recovery project "Black Swan," said it planned to file a written objection to the decision and would "vigorously defend its rights to what it has legally recovered."

"We'll be back to argue the merits of the case," Odyssey chief executive Greg Stemm said. "Odyssey has done everything by the book. For the court to find that enough evidence exists to conclusively identify the site as the Mercedes ... is just wrong."

Peru, which was ruled by Spain at the time the Mercedes was sunk, entered the legal fray in August when it entered a claim for information with the Tampa court. The filing said the coins may be "part of the patrimony of the Republic of Peru."

(Additional reporting by Ben Harding in Madrid, editing by Jane Sutton)