Sergei Magnitsky, who died in a Russian prison in 2009, was Browder's former lawyer. Magnitsky had uncovered a web of alleged tax fraud that he claimed totalled US$230 million and involved a slew of Russian officials - and was then charged with committing that fraud himself.
Browder led an international campaign for further investigation of those allegations, a campaign that prompted the US Congress to pass the Magnitsky Act.
Browder, an American-born financier who gave up his US citizenship in 1998, ran Hermitage Capital Management and was once among the most significant foreign investors in Russia. But his mood changed when he was denied entry to the country in 2005.
In retaliation for the Magnitsky Act, Russia put both Browder and the deceased Magnitsky on trial in absentia for tax fraud in 2013. Since then, Russian authorities have repeatedly attempted to have Browder arrested through Interpol, the International Criminal Police Organisation, based in Lyon, France.
His arrest in Madrid marks the first time that Browder has been detained by European authorities. Browder tweeted a copy of the arrest warrant that was presented to him by Spanish authorities. In English, the document states that Browder was arrested "for alleged participation in the criminal facts: Fraud."
In the face of mounting international outrage, representatives of Spain's national police forces scrambled to explain the situation.
"This morning Bill Browder was arrested because our files showed there was a Russian warrant for his arrest and he was taken to a police station in Madrid," said a spokesman for the Spanish police forces.
"When we did the follow-up on the warrant, we found that it lacked validity, and he was immediately released.... without any kind of interrogation."