How did a giant diamond stolen in a daring London raid end up in a Hong Kong pawnshop?

The diamond was stolen from Graff in 2007 (PA)

They arrived at the London showroom of Graff diamonds in a chauffeur-driven Bentley, wearing the tailor-made suits, chunky watches and expensive suntans of two well-heeled shoppers looking to splash serious cash.

After being allowed across the threshold by a security guard, the men asked a sales assistant to show them jewellery. Then, as her key turned in the display cabinet's lock, they pulled out weapons and announced that they were robbers.

Staff were told to lie face down on the floor. As one of the men threatened them with a silver handgun, the other filled a bag with more than 100 rings, bracelets, necklaces and earrings, worth several million pounds. Then the duo walked calmly out of the shop in Sloane Street, Knightsbridge, and disappeared.

After the raid, in July 2007, police asked for help to trace the men, one of whom wore a Panama hat, and more unusual items from the haul, including a diamond necklace with 270 stones and a combined weight of 155 carats and a price of £1m. But it was to no avail. The haul, and the robbers, had vanished.

Until last month, that is. Almost five years after the audacious crime, Graff has filed a lawsuit against a Hong Kong pawnbroker who appears to have come into possession of a distinctive, 16-carat yellow diamond which was snatched during the robbery. According to legal papers unsealed in New York, the Yau On pawnshop submitted the diamond for certification to the Gemological Institute of America, a US organisation which grades and identifies jewels.

The institute, which certified the diamond before the Graff raid, concluded the stone was the same as the one stolen, although someone had re-cut it. "Graff is and was the true owner of the diamond and entitled to immediate possession of the diamond," said Graff's lawsuit, arguing that the Gemological Institute was obliged to return the stone to it under international law.

The institute is refusing to let go of the diamond without consent from the pawnbroker, which for the time being seems unwilling to hand over a jewel for which it paid HK$3m (£225,000).

Sam Hung, a director of Yau On, told the Associated Press he was not aware the diamond was stolen when the shop bought it. He is seeking a resolution to the legal conflict which will give him some form of compensation for what he called an innocent acquisition.

"When I received the diamond, I had documentation about where I bought it but I had no method of knowing the source," he said. "But we did pay for it – we are a pawn shop. We are now negotiating. My lawyers said maybe we could come to a compromise about how much we need to pay to get it back before the court case starts."

Graff would not comment. The stone is just one of many valuables it hopes to recover. In 2009, robbers also targeted its Bond Street store, making off with £40m of stock in what was the second-biggest robbery in British history.