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Costa Rica now has 90 days to formalize its extradition request over an incident that occured in 2002 off the coast of Guatemala.
The Canadian-born founder of the environmental activist group Sea Shepherd, Paul Watson, has been released on bail in Germany.
CNN reports that Watson, who was arrested while transited through Frankfurt airport last week, posted a bond of 250,000 euros (US$318,000).
He is accused of endangering a Costa Rican fishing vessel during a confrontation off Guatemala’s coast in 2002.
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"It's a relief to be out after a week. I didn't expect something that happened 10 years ago to sneak up on me in Germany," Watson reportedly said after his release, according to CBC. "I had to take action with my crew a decade ago to protect hundreds of sharks and, of course, sharks poachers have very powerful allies in government and in other places."
In a statement on its website, Sea Shepherd slammed the extradition process as "bogus", adding: "while we have won a victory with the decision to allow Captain Paul Watson out on bail, the battle to save his life must now intensify."
Costa Rica has been given 90 days to formalize its extradition request and provide all the relevant documentation, the ABC explains.
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There is no extradition treaty between Germany and Costa Rica, so it the German Ministry of Justice will make the final decision.
Reuters says that means that Watson may not be taking part in Sea Shepherd's annual campaign against Japan's whale hunt later this year.
However, speaking to the news agency, Watson dismissed the case as an "inconvenience" and said his ships would soon "stop the illegal activities of whale-hunting fleets once again".