Police in Scotland said the man, who cannot be named at this stage, was arrested over the murder of a man of Pakistani-origin, Ansar Shah, in the seaside town of Ayr in Ayrshire on October 4, 1993, and will now be returned to Scottish jurisdiction.
"It is anticipated that proceedings to return the man to Scottish jurisdiction will take place in due course," a Police Scotland statement said.
Local media dubbed the incident as a restaurant war between rival Indian and Pakistani restaurants, over migrant staff employed by them, at the time of the incident.
Mr Shah, the owner of Armaan Brasserie which has since been renamed as Ayr India, was stabbed to death outside the eatery when a group of Pakistanis clashed with Indians, the 'Ayrshire Post' had reported at the time.
Two other men were severely injured in the attack and treated in a hospital.
A nationwide manhunt was launched for one of the suspects, Avtar Singh, who had worked as a waiter in the Jewel in the Crown restaurant in Kilmarnock, Ayrshire.
The unsolved murder case was being re-examined by specialist cold case detectives in the UK since May this year.
Detective Chief Inspector Mark Bell of Police Scotland Homicide Governance Review said, "Police Scotland is committed to pursuing those persons who are allegedly responsible for the gravest of crimes.
"Time and location is no barrier to the efforts and determination of our staff and partners to pursue justice for victims and their loved ones."
The arrest follows a joint operation coordinated from the Scottish Crime Campus, and led by Police Scotland's Homicide Governance and Review Team, involving participation with Police Scotland's International Assistance Unit, Crown Office and Procurator Fiscal Service and Law Enforcement partners across Europe including Europol, French and German authorities, and the UK National Crime Agency (NCA).
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