MoD in secret deal to salvage HMS 'Sussex' (sunk 1694) and its golden cargo

The Ministry of Defence is in secret negotiations with an American salvage firm over a sunk 17th-century British warship, the Sussex, and its cargo of gold and silver thought to be worth billions.

Lost in 1694, the Sussex is thought to hold up to 10 tons of gold that was to be secretly ferried to the Duke of Savoy to buy his assistance in the Nine Years War with France.

Just off Gibraltar, a sudden storm resulted in the 80-gun ship sinking into the Atlantic. Only two of its 550 crew survived.

The precise whereabouts of the ship had remained a mystery until Odyssey Marine began investigations in 1995, scouring archives throughout Europe. Speculation suggests the Sussex may hold coins and artefacts worth up to £2.5bn.

Under the 1989 International Convention on Salvage, the ship and all its contents are still retained as the sovereign property of Britain. But Greg Stemm, spokesman for Odyssey Marine, confirmed this weekend that it and the MoD were negotiating a deal that could well "create a precedent for private-public partnerships in the management of deep ocean cultural heritage".

News of the talks has left many in Britain's archaeological community angry. An MoD spokesman insisted that "the finders keepers school of thought doesn't exist" in relation to the Sussex. Nevertheless British archaeologists claim that the negotiations put the UK on a slippery slope towards a more Americanised system of dealing with historical artefacts.

Mike Williams, senior lecturer in law at the University of Wolverhampton and an expert on maritime law, said: "American courts have gone along with the idea that private profit and archaeology can go hand in hand whereas in Europe the archaeological community is very much opposed to any private profit from archaeological finds."

In Britain, there was no public investment in the conservation of marine archaeologi- cal sites, he said. "HMS Stirling Castle for example, which sank in 1703, is completely intact. It's an amazing place to dive around – you can swim along its galleys, have a good look round. But it's emerged from under the protection of a sandbank and as a result it's falling to bits. Yet the Government hasn't given a penny to help protect it. They do nothing for the Stirling Castle and yet they are taking an interest in the Sussex. Why? Because there's gold on board."

Despite two legal precedents in the US in which Spanish ships were returned by the Supreme Court to their sovereign state, Odyssey Marine remains positive about its negotiations with the MoD.

Mr Stemm said: "Any financial benefit from the cargo of coins which we hope to find will provide funding for one of the most advanced archaeological excavations ever undertaken."

But Mr Williams said: "European archaeology is firmly set against profit. The idea of the Government doing a deal with a salver is wholly objectionable to them. There is an enormous amount of concern building up that the Government are going to run a smash-and-grab."