The Aboriginal Land Council of Tasmania say Traditional Owners have part ownership of a yacht that was severely damaged during the Sydney to Hobart yacht race.

After being struck by an unknown object, the 40-foot yacht Huntress washed up and was subsequently salvaged from Cape Barren Island's Christmas Beach.

The collision severely damaged Huntress' rudder when it was located 80 nautical miles east of Flinders Island two days into the race on the morning of 28 December 2022.

After the crew were rescued and a sea salvage planned, Huntress washed up on the remote Cape Barren Island, located south of Flinders Island a week later on 4 January 2023.

It has since been re-floated and salvaged by insurers however ALCT chairman Michael Mansell said the insurance company responsible should not have done so, claiming the boat now "belongs to Aborigines", who may now be entitled to up to $2 million under Aboriginal law.

"We do not give permission for the insurers to move the vessel Huntress," Mr Mansell told the ABC.

"The yacht cannot be removed from the island until one-third of its value is paid or the owners agree that Aborigines own the vessel."

He said Huntress should not have been salvaged because "any vessels wrecked or washed up on the shores of Aboriginal land belongs to Aborigines".

Mr Mansell's claim is based on an Aboriginal sea law that has ties to the settlement of Cape Barren Island by European people in the 1820s.

"The Huntress has washed up on the shores of Aboriginal land on Cape Barren and that makes that vessel the property of Aboriginal people," he said.

"That's always the Aboriginal law."

"From the time that the white people chased us off our land in Tasmania and put us on the islands, the old people always applied Aboriginal traditional law to anything that washed up on the shores of Aboriginal land."

Drawing on vessels that fell under the law in the 19th and early 20th century including the Apparition (1840), the Antares (1853), CC Funk (1898) and Idle Hour (1930), Mr Mansell said Aboriginal laws "override those of the white man."

"Many boats have fallen under this law," Mr Mansell he told the ABC.

"The white man's salvage laws do not apply because this is sovereign Aboriginal territory and our laws override those of the white man."

Agreeing with Mr Mansell, Cape Barren Island Aboriginal Association general manager Denise Gardner said the boat should not have been salvaged from the island.

She said the association did not previously have knowledge of the history of the island's salvage laws, only becoming aware after the yacht had been retrieved by insurers.

"Unfortunately, we've missed the boat," Ms Gardner told the ABC.

Salvage business Total Dive Solutions said the Aboriginal community on Cape Barren Island was consulted prior to the successful salvage operation.

"Total Dive Solutions recognises this could not have been possible without the support and assistance of the the local Indigenous community," the company said.

Neither the beach or natural environment was damaged through the salvage process, with Total Dive Solutions thanking two Indigenous Cape Barren Island representatives "for their permission and local site knowledge."

Acting Tasmanian Premier Michael Ferguson said the Tasmanian Government "would not be intervening" over the salvage matter, a position criticised by Mr Mansell.

"Their view is that they decide what the parameters of Aboriginal rights are and we say that's a load of bull****," he told SBS.

"We decide, because that's what our people have always done."