Gas magnate Dmytro Firtash was taken into custody over alleged links to organised crime in Spain, moments after a Vienna court ruled he could be extradited to the USA on corruption charges.
Paul Manafort had worked with former Ukrainian President Viktor Yanukovych, an ally of Russian President Vladimir Putin, during his run for the former Soviet state's presidency.
Firtash, 51, has lived in Austria since 2014.
"We must not allow Austria to become a stooge for the political world power, the USA", Mr Boehmdorfer argued, much as he had in 2015 when an Austrian court rejected the United States extradition request.
"In February of 2014, the US wanted to remove Mr. Firtash from the geopolitical and from the Ukrainian domestic game", defense lawyer Christian Hausmaninger said in the lower court proceedings. He was indicted by a US grand jury for his alleged involvement in paying $18.5 million in bribes to Indian officials, through USA banks, to facilitate a $500 million titanium mining project in India.
Anton Gerashchenko, an adviser to Ukraine's interior minister, said "the Americans [might] offer Firtash the chance of freedom in exchange for evidence linking Russia's top leadership to corrupt schemes".
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The Ukrainian magnate backed Yanukovych's successful 2010 election campaign, which saw him go on to expand his business interests. Instead, she said, it was triggered by the receipt of "supplementary information from Spanish authorities".
Before Tuesday's verdict, Firtash's lawyer Dieter Boehmdorfer reiterated that the case was political, adding that Firtash was the victim of a United States strategy to curtail Russia's influence in Ukraine, Reuters reported.
"He is very valuable not only as a defendant but as witness too".
The Austrian justice ministry must still make a final decision about sending Firtash to the United States, where his case is pending in a district court in Chicago.
Firtash's lawyer slammed Tuesday's extradition ruling, saying "appropriate steps" would be taken to overturn it.
"It wasn't for us to judge whether Mr. Firtash was guilty, but only whether the extradition is allowed", Austrian Judge Leo Levnaic-Iwanski was quoted. "We remain confident that Mr. Firtash's innocence will be proven".