U.S. judge recommends returning treasure to Spain

By Jim Loney

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 the firm said on Thursday it would contest the non-binding decision.

The recommendations 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," said Spanish Culture Minister Angeles Gonzalez-Sinde, adding it set an important precedent.

Odyssey's shares closed nearly 43 percent lower at $2.21 on the Nasdaq exchange on Thursday.

The company said the magistrate's recommendations would have no impact on its balance sheet because the coins were never treated as assets.

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 had flown the treasure to Florida from Gibraltar, a British territory.

CODE NAME 'BLACK SWAN'

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. The attack led Spain to declare war on Britain and enter the Napoleonic Wars on the side of France.

Pizzo said in his report 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 the artifacts be returned to Spain.

Odyssey, which had code-named its 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."