The battle for the 'Mercedes' millions

For 200 years, the silver coins settled silently into the Atlantic seabed, 3,000 feet beneath the waves. They gathered in clumps like rocks across a vast swath of ocean floor near southern Portugal, crusting over with sediment and weighing a total of 17 tonnes.

The coins were certainly of no use to the 250 sailors who carried them from Peru on what was probably the Spanish frigate Nuestra Señora de las Mercedes, which sank in 1804, torn apart by British cannon fire. But now, transported from their watery-yet-lucrative grave to litigious landlubbers, those 600,000 idle coins, reportedly worth up to $500 million, are working overtime.

They have sparked a high-stakes legal battle in the United States between Spain, which claims ownership of the bounty, and Odyssey Marine Exploration, the American shipwreck-hunting company that detected it with hi-tech robots, extricated it from the seabed and flew it in bucketfuls to Florida in 2007. And they have dredged up murky questions about ownership and preservation of the three million shipwrecks that Unesco believes still rest on the world's ocean floors.

Most recently those crusty coins, believed to be the largest collection from a single deep-water site, have a caused diplomatic embarrassment too, thanks to US State Department cables released by WikiLeaks. They revealed the latest, and highly unlikely, weapon in the transatlantic skirmish over the sunken treasure: an impressionist painting by Camille Pissarro, entitled Rue Saint-Honore, Apres Midi, Effet de Pluie.

This painting, valued at $20 million, hangs in Madrid's Thyssen-Bornemisza Museum, ostensibly sharing nothing in common with naval strife or shipwrecks except perhaps the rain water which splashes on Pissarro's grey Parisian street.

But the painting was once owned by a German Jew who was forced to sell it cheaply to Nazi officials in exchange for an exit visa in 1939. The owner's descendants in California have waged their own legal bout with the Spanish state since 2005. The museum refuses to relinquish it, arguing that it was bought honestly long after the Nazis stole it. Enter WikiLeaks. According to the cables, the US government offered to help Spain in its legal fight for the sunken treasure in return for Spanish assistance in recovering the Pissarro.

In the cables, the American ambassador suggested that the two countries "avail themselves of whatever margin for manoeuvre they had, consistent with their legal obligations, to resolve both matters in a way that favoured the bilateral relationship."

It is not known whether such a swap was indeed offered. But the possibility quickly became cannon fodder for the undersea archaeology company, which is using the alleged collusion between the two governments to bolster its case before a US appeals court.

"The possibility that someone in the US government came up with this perfidious offer to sacrifice Odyssey, its thousands of shareholders, and the many jobs created by the company in exchange for the return of one painting to one individual is hard to believe," Odyssey's chief executive, Greg Stemm, said in a written statement when the cables were published in December.

Odyssey does not believe there is enough evidence to establish that the treasure came from Nuestra Señora de las Mercedes, which was attacked by British ships drawing Spain into the Napoleonic Wars. It simply refers to the wreck by a code-name, Black Swan. But even if the Black Swan is the Mercedes, the company believes it still has a right to the treasure. Mercedes, Odyssey argues, was carrying out a commercial mission, and the bulk of the silver coins belonged to merchants, not the Spanish state. Under US law, foreign states have the right to claim only military wrecks, the company claims.

Spain's legal counsel, James Goold, of the Washington-based firm Covington & Burling, rejects that claim – "it's like claiming the USS Arizona in Pearl Harbour was a merchant ship" – and accuses the company of thwarting UN conventions on protecting undersea heritage.

"They secretly found the site, they conducted a round-the-clock campaign for two or three weeks to strip the site of coins, and then they sailed away – that's looting, not archaeology," Mr Goold told The Independent. "They didn't seek authorisation or report the ship. Instead they grabbed as many coins as possible and concocted a cover story that they didn't know what ship it was."

According to Mr Goold, Odyssey's own videos, presented as evidence, demonstrate that the ship is the Spanish frigate. "There were Spanish navy cannons, swords, small arms, the rudder, everything just like you see at the Naval Museum in Madrid, but Odyssey didn't recover it," Mr Goold said. "They just took the coins, steered clear of the cannons and claimed it was a mystery ship with no intact hull found. But it wasn't intact because it blew up."

The Spanish government, meanwhile, has treated the company like modern-day pirates. Spanish police blocked Odyssey's ship when it left port at Gibraltar, forcefully searched the cargo and jailed the captain overnight.

Mr Stemm of Odyssey said he was surprised by the hostile treatment. "We had a good relationship with the Spanish government for a long time," he said. "We actually invited the Ministry of Culture to send archaeologists along with the project."

The sunken treasure caper has sparked debate in Spain about how to keep thousands of other colonial-era shipwrecks from private hands. A national environmentalist group, Ecologists in Action, petitioned Spain's Culture Ministry to recover all of the sunken treasures, place the best artefacts in museums and auction the rest – with proceeds going to Latin America's indigenous peoples.

But it is hard for cash-strapped governments such as Spain's to afford the technology to compete with a company like Odyssey, which trades on the Nasdaq stock exchange and which has, according to Mr Stemm, invested $150 million in developing its technology.

Indeed, the world of the hi-tech shipwreck hunter is unlike anything Jacques Cousteau encountered with his aqualung. The company's team of nearly 200 archaeologists, engineers, conservationists and other technicians scan the ocean depths with the help of an eight-tonne underwater robot nicknamed Zeus and a barrage of equipment. Last year's operations cost Odyssey $20 million.

With unmanned robots reaching record depths throughout the world, archaeologists are increasingly concerned how best to preserve underwater heritage. According to Unesco, more than 160 large shipwrecks have been commercially exploited since the 1980s. In 2001, Unesco drafted a convention to protect wreck sites. It recommends preservation of objects in their original locations and bans trade or speculation in artefacts.

Odyssey takes pains to distance itself from irresponsible "treasure hunters" who, as Mr Stemm puts it, "tear apart shipwrecks in search of treasure without any regard to the archaeological and historical importance of the site".

The company points to HMS Victory as an example of its illuminating power. Following an agreement with the British government, the company searched for the 18th century predecessor to Lord Nelson's flagship, considered the largest and most sophisticated of its day. In 2008, Odyssey's crew located the wreck in the English Channel, about 60 miles from where it was thought to have gone down with 900 souls, 110 bronze cannons and £400,000. "It solved a long-standing naval mystery," Mr Stemm said.

Stay tuned: the silver has yet to turn up.