IT WAS billed as the shipwreck find of the century with £250m of treasure recovered from a sunken 17th-century vessel lost off Land’s End.

But the landmark discovery is now at the centre of an international legal battle amid claims that the haul has come from another ship which sank 1,000 miles away.

At stake for the salvage company that recovered the treasure is 17 tons of silver coins. It claims ownership rights because it says the wreck is owned by no state and was found in international waters.

The treasure, said to be the most valuable such haul ever found, is reported to have come from the 366-year-old Merchant Royal, which sank near the Isles of Scilly. It was known by some as the “El Dorado of the Seas” for its long-lost cargo of riches.

However, the Spanish government is taking legal action against the salvage company, Odyssey Marine Exploration, because it suspects the treasure has actually come from the Nuestra Señora de las Mercedes, a 36-gun Spanish frigate that went down off the Portuguese coast en route from Montevideo to Cadiz. The Mercedes, which was sunk by British Navy ships in October 1804, was known to be carrying more than a million silver dollars.

The Spanish government’s suspicions have been aroused by the discovery that in April Odyssey filed a claim for salvage rights in the US courts over an unidentified 19th-century wreck said to be approximately 100 miles west of Gibraltar.

It is this ship which the Spanish government believes to be the Mercedes. If that is confirmed, the financial repercussions for Odyssey could be disastrous. As a warship, the Mercedes would have sovereign immunity under international maritime law. This means that both it and its cargo remain exclusively the property of Spain. By contrast, salvagers of nonstate owned ships can expect to be awarded up to 90% of their find.

Last week lawyers acting for the Spanish government put motions before a US court demanding that Odyssey reveal all the information in its possession about the identity and contents of the wreck.

The company has so far refused to reveal the name or location of the sunken treasure ship containing the silver coins, calling it only by a code-name of “Black Swan”.

However, it has done nothing to halt speculation that the Black Swan is the Merchant Royal, which is also believed to have had a large consignment of Spanish coins. Odyssey filed a claim in the US courts last September relating to a wreck it had found off Land’s End, believed to be the Merchant Royal, prompting assumptions that the 17th-century ship and the Black Swan are one and the same.

To mask the origin of the treasure, pictures released by Odyssey of the coins have the imprint on them digitally obscured to prevent identification, although the edges are expertly milled. Spanish coins began being produced in such a way only by the middle of the 18th century, 100 years after the Merchant Royal sank.

In a further complication for Odyssey, experts say although the Merchant Royal was not a sovereign ship, Spain would likely have a claim its treasure, too, because historical records suggest it originated there.

The tension over the treasure has been increased by separate court actions taken by the authorities in Spain resulting in arrest warrants being issued for Odyssey’s two ships, which are now docked at Gibraltar. It has been disclosed that the company secretly flew out the Black Swan treasure from Gibraltar to America.

Mike Williams, senior lecturer in underwater cultural heritage law at Wolverhampton University, said the situation was making the British authorities uncomfortable. “There is the potential here for a serious diplomatic incident,” he said.

“The Spanish don’t recognise British territorial water around Gibraltar yet if Odyssey’s ships are boarded in disputed water the British may be obliged to act. It is all very embarrassing to the British.”

In a further twist, Odyssey said this weekend that the presence of its ships in Gibraltar was unconnected with any salvage operation: they were there to participate in a competition being run by Volvo as a promotion for the Disney film Pirates of the Caribbean: At World’s End.

The ships had been primed to retrieve a nearby sunken “treasure chest” containing £25,000 of gold doubloons and the keys to a new Volvo for the winner of the competition.

Greg Stemm, Odyssey’s co-founder, insisted the secretive nature of his ships’ earlier movements around the Spanish coast was due to the fact that the company was contractually bound by a nondisclosure agreement with Volvo rather than anything to do with the retrieval of the Black Swan treasure.

He said: “It has been a terrible misunderstanding that has inconvenienced a lot of people and cost a lot of money.”

Odyssey is now in a stand-off with the Spanish government as the company has said it will not disclose the identity of the Black Swan until it can revisit the site and extract further salvageable items. Its only two ships are, however, effectively blockaded at Gibraltar by the Spanish.

Ali Nesser, Odyssey’s director for international development, said: “We are trying to defuse the situation as much as possible.”

Additional reporting: Brian Reyes

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