A U.S. hedge fund, NML Capital Ltd., requested that Ghana detain the square-rigged sailing vessel, MercoPress reported. NML holds Argentine bonds that have been in default since 2002 and says the government owes it $300 million.
The U.N. International Tribunal for the Law of the Sea agreed with Argentina's argument that a military vessel cannot be seized by creditors.
"Ghana must release with no conditions the frigate, guaranteeing that the vessel, its captain and the crew can leave the port of Tema and ensuring their provision," the panel said in a unanimous decision.
About 300 crew members and Navy cadets were aboard the Libertad when it was seized. Most flew home in October, leaving a skeleton crew on board.
Argentina has accused NML of being a "vulture fund," saying it bought the bonds at a fire sale price.