In March 2014, Dmytro Firtash, a politically influential Ukrainian billionaire, was arrested in Vienna at the request of the FBI. At the time, the DOJ hailed the arrest as the fruit of a multi-year investigation into an alleged international corruption conspiracy and noted that it was “not related to recent events in Ukraine.” In a ruling handed down on April 30, an Austrian court disagreed with this characterization, refusing to extradite Mr. Firtash to the US on the grounds that the request was “politically motivated and therefore extradition is inadmissible” under the US-Austrian extradition treaty. This outcome raises a number of interesting questions – and the answers may have meaningful implications for European businesses and individuals facing potential regulatory scrutiny from US authorities.

First, what will happen next with the case against Mr. Firtash? Immediately after the judgment was delivered, the Vienna Public Prosecutor’s office entered an oral notification of appeal, and now has until May 15 to file an official complaint against the judgment. The court of second – and in this case final – instance is the Vienna Court of Appeal, which should issue its decision within the next six months.

Second, does this decision reflect growing European skepticism towards US extradition requests or a growing fatigue with the extraterritorial application of US laws? Yes, but perhaps only to a certain extent. First, it is important to note that this is not the first case in recent years where a politically-sensitive American extradition request has been dismissed by the courts of a European ally. (See e.g., UKFranceIreland.) However, what is striking about this decision was how clearly Judge Bauer presented his distrust of American intentions and his conclusion that the extradition request was “politically motivated”. Judge Bauer was very troubled by the timing of the extradition request, which coincided with visits by an assistant secretary of state to Ukraine. Moreover, he noted that “America obviously saw Firtash as someone who was threatening their economic interests” and questioned the existence of the two key anonymous witnesses relied upon by US prosecutors. His view that the extradition request was largely a tool used to advance US foreign policy interests therefore does, as put by theNew York Times, “reflect the diminished credibility of the United States authorities, even in the eyes of a European ally.”

However, it may be unwise to draw an overly broad conclusion, as there is no indication of a general trend of US extradition requests being rejected on the basis of alleged political motivation. (As discussed further below, in the most analogous case, a Thai court’s initial rejection of the US’s extradition of alleged Russian arms dealer Victor Bout on “political” charges was subsequently overturned.) The facts of the FBI investigation, the geo-strategic stakes in Ukraine, the outsized political figure cut by Mr. Firtash, and perhaps also Judge Bauer’s individual outlook, make this case unusual, if not unique. It is too soon to conclude that his skepticism is or will be shared by the Vienna Court of Appeal – let alone other European courts deciding other US extradition requests.

Finally, are there likely to be any ramifications for US-Austrian cooperation? This is of course difficult to predict with certainty. There are a number of indicators that recently, bilateral cooperation has been strong: Austria played a key role in the arrest and extradition of a suspect in an identity theft scheme in January; following prolonged US-pressure, Austria recently agreed to adopt new measures against bank secrecy; and Transparency International gave Austria a “moderate enforcement” rating for combating corruption in 2014 (up from “little or no enforcement” just a few years ago). Indeed, according to one report: “Lawyers involved in Mr. Firtash’s case say that the Justice Department specifically chose Austria as the country in which to seek Mr. Firtash’s arrest, even though he also spent extended periods of time in France and England, because the department believed the Austrian authorities would more readily agree to extradite him.” This optimism now appears to have been misplaced – and this is also not the first time that an Austrian court has put a stop to US-Austrian law enforcement cooperation. Most notably, in September 2014, the Vienna High Court lifted a freeze that had been put in place at the request of US authorities on the bank account held by the wife of former US Ambassador Zalmay Khalilzad.

Should the Vienna Court of Appeal uphold the refusal to extradite Mr. Firtash, the Austrian government will be bound by this decision, with no apparent extra-judicial options at hand. It will thus be interesting to observe (1) whether and to what extent the US and Austrian authorities cooperate on appeal, and (2) whether another setback will adversely effect on the two nations’ bilateral relationship. With regard to the first issue, the fact that even the Austrian state prosecutor admitted doubts as to whether the US had presented sufficient evidence to justify extradition indicates that the US and Austrian authorities do not see eye-to-eye on this case.

However, there are some indications that such disagreement may not seriously impact the broader cooperation described above. The US response has been thus far been relatively muted, with a DOJ spokesperson merely expressing the department’s “disappointment” and its intention to appeal Judge Bauer’s ruling. In comparison, following Thailand’s initial refusal to extradite Mr. Bout, the US brought “intense diplomatic pressure” to bear – summing Thailand’s ambassador and issuing public letters “warning that the U.S.'s longstanding ties with Thailand could be damaged if Mr. Bout [was] freed.”

Nonetheless, a number of recent US-led investigations (including of SiemensPfizer and BAE) have involved allegedly wrongful conduct in Austria. Thus, it is important for Austrian businesses and individuals facing potential scrutiny from US authorities to keep an eye on the ultimate outcome of the Firtash extradition proceedings, and be on the lookout for any possible fallout.