As I understand it, the aspect of this verdict that alleges innocence due to a lack of proof on behalf of the prosecution that the artifacts in question genuinely came from within China's borders is as shocking as it is problematic. Unless the dealer was deliberately trying to sell forgeries produced on the well-attested-to Hong Kong forgeries market (e.g. here), something even some honest collectors are acknowledging (here), then the origin of these allegedly authentic antiquities within the borders of modern China ("owner" of Hong Kong since 1997) is all but certain.
Also relevant is the historically and archaeologically attested fact that Hong Kong and the Guangzhou region itself flourished as a trading centre during the specific dynasties in question, especially the Tang (for general background, see here and here). The question of what to do with confiscated artifacts seized within the border of a modern country that once was controlled by an empire with its headquarters in another modern country is always tricky (Roman coins, anyone?). However, in my opinion, it has long since lost its utility as an excuse to cover up smuggling or provenance manipulation.
As someone privy to the original verdict as handed down, I would also suggest that the argument used to get the trophy skull returned is quite flawed. I can share with readers that an internationally renowned expert in human osteology was asked to take cranial and facial measurements of the skull and run this data through a program routinely used in forensic cases to determine the most likely genetic ancestry of an unidentified person. Several runs of the dataset consistently showed the skull to derive from an Asian population distinctly not native to the Philippines. When mounted as a trophy by former "head hunters," it was thereby modified and adopted into the tangible cultural heritage corpus of the ethnic minority group in question.
Importantly, it would have been bought and sold by middle-men, and eventually by BC Galleries, as an ethnographic "curio" from the Philippines! However, because the craniometric measurements suggested a non-native ancestry for the skull in question, all other claims were rendered null and void. Really?!! If a local or international dealer was attempting to sell, say, the freshly dug up remains of a WWII veteran (of any nationality), straight from the grave...THAT is a different story. In that case, forensic osteological techniques would be ideal to help confirm a recent war casualty and affect appropriate repatriation. Not in this instance...
The article first sited above raises one last, worrying point. The verdict as currently stands does, to me, allegedly imply that it will be harder for the Australian government, international authorities via local embassies, and lawyers and criminological professionals advocating against the illicit trade to force and follow through with new seizures, especially against moneyed defendants. What is needed now to further the global fight are more up-to-date (and update-able) databases that can quantify temporal trends and regional and intra-national variation, especially regarding the smaller, portable, or more "common" artifacts that so often escape confiscation or media attention.
Information such as this would greatly assist outreach efforts towards the general public, producing consultable resources for customs officers in source and demand countries, museums, and even those responsible dealers and collectors who wished to consult the reports produced. There are currently several teams (e.g. Trafficking Culture) and independent scholars engaged in such research, and come December, a colleague and I will join these efforts. When things get fully underway, details will be shared as events warrant. Stay tuned!
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