* UK court says Saadi bought mansion with stolen money
* Judge says rightful owner of mansion is state of Libya
* First asset recovery through court since uprising - group (Adds quotes, background)
By Estelle Shirbon
LONDON, March 9 (Reuters) - The Libyan government reclaimed possession from Saadi Gaddafi of a London mansion worth 10 million pounds ($16 million) after a British court ruled on Friday it had been bought using stolen Libyan state funds.
Anti-corruption activists said it was the first successful asset recovery case brought to court by a country swept up in the "Arab Spring" uprisings that began more than a year ago.
"I am satisfied on the evidence put before me that the property was wrongfully and unlawfully purchased using funds belonging to the claimant (the state of Libya)," said Justice Popplewell, delivering his ruling at the High Court in London.
The eight-bedroom house in the upmarket area of Hampstead Garden Suburb has a swimming pool, jacuzzi, suede-lined home cinema and flat-screen televisions in every room, in keeping with Saadi's well-publicised taste for luxury.
The claim was brought on behalf of the new government of Libya, the National Transitional Council that came to power following the overthrow and murder of Saadi's father Muammar Gaddafi last year.
"This ruling signals the end of the era of impunity for dictators and their families who loot state resources for their personal benefit," said Mohamed Shaban, a London-based lawyer of Libyan origin who was representing Libya in the case.
"It also signals the intention of the new Libyan government to pursue the recovery of stolen assets ... We hear of other properties in London, bank accounts in the UK and Switzerland, valuable paintings, yachts, shares in companies, even an ostrich farm. It's a massive project," he told Reuters at the court.
The house was bought in May 2009 by a shell company based in the British Virgin Islands called Capitana Seas Limited. The owner of the company was Saadi Gaddafi, according to evidence presented to the court and accepted by the judge.
No one representing Capitana or Saadi was present in court to contest Libya's claim to the house.
The judge said the defendant, Capitana, had 14 days to hand over the house to Libyan representatives and should pay 120,000 pounds ($188,300) to cover their legal costs, although the dormant company appears unlikely to produce the cash.
Saadi fled south over Libya's border with Niger in September as rebels gained the upper hand over his father's forces. The new Libyan authorities have urged Niger to extradite him.
Campaigners from the anti-corruption group Global Witness attended Friday's hearing and welcomed the ruling, which they hoped would be the first of many to emerge from the Arab Spring.
They also said the case demonstrated that it remained too easy for corrupt politicians to park their stolen money in Britain or in other countries.
"The British government needs to do more to ensure that corrupt politicians and their family members cannot bring their ill-gotten gains into the UK and spend them on luxury lifestyles," said Robert Palmer of Global Witness.
"If Saadi had a house, he must have had a bank account here as well. What checks did that bank do on his source of funds?"
Located on a quiet street described by some British media as Millionaire's Row, the house made headlines when it was taken over by a group of Libyan squatters calling themselves "Topple the Tyrants" at the height of the Libyan conflict last year.
Gregory Mitchell, a senior lawyer representing Libya at Friday's court hearing, said that since then the house had been peacefully handed over to Libyan embassy staff who were looking after it while awaiting the outcome of the legal action.
Before Libya's civil war, Saadi was best-known for his jet-setting playboy lifestyle and obsession with soccer. He had a brief career as a professional player in Italy's Serie A league but spent little time on the field.
He also played for the Libyan national team. Libya's former Italian coach, Francesco Scoglio, was once quoted as saying he was fired for not picking Saadi to play.
($1 = 0.6372 British pounds) (Editing by Sophie Hares)