State immunity is regarded as an inherent consequence of the principle that states are sovereign and mutually equal, and therefore states cannot have jurisdiction over each other. The principle of state immunity has however, in general, evolved from a previous absolute immunity to a more restrictive practice. The more restrictive approach led to commercial and other acts under private law by a state not being subject to immunity, so that only acts by the state acting in its capacity as a state (sovereign acts) were able to be protected.

The court referred to the United Nations Convention on Jurisdictional Immunities of States and Their Property from 2004 (Convention), which will soon be incorporated into Swedish law. The Convention and the Swedish law have not yet entered into force, but the Convention is largely a codification of present rules or a position that is generally acceptable for many states. Although immunity from enforcement and measures of constraint is the main rule, there are exceptions. In this case, Article 19(c) of the Convention contains the applicable exception, which holds that enforcement is permitted if the property in question is in use, or intended for use, by the state for other than government non-commercial purposes and is located in the territory of the state of the forum.

The interpretation of Article 19(c) was the decisive matter in the case. The court held that Article 19(c) must generally be considered to grant states an opportunity to claim immunity, at least with respect to property that is used for a state's official functions. However, it cannot mean that immunity from enforcement measures can be claimed based solely on a property being owned by a state and used for government non-commercial purposes. A more thorough review of the purpose of the holding must instead be assessed.

The court held that it is clear that real property held by a state is protected by immunity if it is used to a substantial extent (not necessarily its main use) as premises for the state's officials. The same applies if it is used for a different official use tied to the representation based on a bilateral agreement. This is because the property is used for carrying out diplomatic functions.

Thereafter, the court held that if a property is used for several purposes, an assessment of the various purposes of use shall be made to examine if, together, they are such that immunity can be invoked. To ensure that a foreign state does not have to disclose information against its will, the court held that the ordinary rules of evidence required for enforcement cannot always be maintained in such cases.

When assessing this case, the court based its ruling on the above principles and applied them as follows in this case.

According to the Russian Federation, the property was used solely for official purposes. This was contested by Sedelmayer, who argued that it was used for commercial purposes, with reference to the fact that the property served as a residence for approximately 60 people. The property was previously registered as official premises for the trade delegation, but that was no longer the case.

In assessing the purpose of the use of the property, the court noted that 15 apartments in the property were used as accommodation for diplomats from the Russian Federation. Such use falls under the Vienna Convention on Diplomatic Relations 1961 and is protected by diplomatic immunity. However, diplomatic and state immunity are not the same thing. In addition to the accommodation, the property was used for private and non-commercial purposes. Therefore, the use of the property protected by the Vienna Convention was not sufficient to act as a bar to execution, since a significant part of the use was not within the Russian Federation's official activities.

With regard to the rental payments collected from the leases in the building, these were also regarded as not emanating from non-commercial government activities. Consequently, there were no barriers to enforcement in the property or the rental payments.