The WikiLeaks co-founder breached bail conditions and sought refuge at the embassy in 2012 to avoid an arrest warrant [BBC timeline] from the Swedish Prosecutor's Office regarding two separate sexual assault claims.
But Judge Arbuthnot said that should the United States seek Assange's extradition, he would be able to challenge that in the courts by raising issues such as whether he could get a fair trial and whether USA prison conditions were acceptable. Assange has strongly denied the Swedish accusations.
He also claimed the Australian was justified in seeking refuge in the embassy because he has a legitimate fear that US authorities are seeking to arrest him for WikiLeaks' publication of secret documents.
Swedish prosecutors dropped the investigation previous year, but the British warrant for violating bail conditions still stands.
In response, Assange's lawyer, Mark Summers QC, told the judge the case should nevertheless be discontinued because it was not proportionate in the interests of justice. "He should have the courage to do the same".
His lawyers were in court to ask Arbuthnot to cancel the arrest warrant against Assange, on the grounds that it was no longer in the public interest to uphold it. This seems to have led to the significant factual errors in the judgment.
She said Mr Assange was "a man who wants to impose his own terms on the course of justice.he appears to view himself as above the law".
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Arbuthnot's ruling rejected an argument by Assange's lawyers that his time in the Ecuadorian Embassy has all but amounted to imprisonment. I do not accept there is no sunlight; there are a number of photographs of him on a balcony connected to the premises he inhabits.
"Mr. Assange's health problems could be a lot worse", said Arbuthnot, as quoted by ABC.
"If that happened there would have been a diplomatic crisis between the United Kingdom, Sweden and the United States which would have affected global relationships and extradition proceedings between the states".
"If the United States initiates extradition proceedings, Mr Assange would have the ability to raise any bars to the extradition and challenge the proceedings" in a British court, she said.
"I do not find that Mr Assange's fears were reasonable", the judge said.
Assange wrote on Twitter that his latest legal argument hinged on an alleged "cover-up" by the British government to keep him detained. Marianne Ny, the chief prosecutor in Sweden, stressed that she was not declaring Assange innocent, only that he no longer faces any charges in the country.
Had he won, Assange would have been free to walk from the embassy without being arrested.