So what? The museum knows now. The art was stolen. It should be returned to the family from whom it was stolen. The museum's grievance is with whomever they bought it from, and they should seek reimbursement from them.
Is this judge in his right mind?
You are right from a moral perspective. I also think that is how it works in most US states. But the judge must rule on the law as it is written and in this case it is Spanish law. Or should he just “do the right thing” regardless of the law?