As can be seen from a video uploaded to YouTube, the Iraqi man, who was being treated in a mental health clinic in the town, was standing opposite the check-out holding a bottle by his side.
The language barrier is causing confusion. The man speaks in Arabic as the check-out woman at discount retailer Netto in Arnsdorf repeatedly asks him in German to put the bottle down.
The man does not appear violent in the video, nor does he raise the bottle. But the staff appear afraid to approach him.
After around two minutes of this stand-off three men dressed in black walk into the shop, collar the man and drag him out. When he appears to resist, they brutally beat him.
The video ends with a woman saying “it's such a pity that we need a self-defence group.”
According to police, it was the third time that day that the mentally ill man had entered the supermarket after the SIM card he had bought for his mobile phone there didn't seem to work. On the first two occasions the police had arrived and taken him back to the hospital.
Staff at the shop claim that the man grabbed the bottle from the shelf and acted threateningly towards them.
After the end of the video, the men reportedly dragged the Iraqi man into the parking lot and tied him with cable ties to a tree.
When police arrived shortly afterwards, the men explained they wanted to prevent his escape.
Officers told the men to leave without asking for their identification.
Police are now investigating the Iraqi refugee on suspicion of threatening people. They are also investigating the as-yet unidentified men on suspicion of unlawful detention.
'Horrible and shameful'
According to the Sächsiche Zeitung, at least one of the culprits is already well known in the town - because he is a local politician for Chancellor Angela Merkel's Christian Democratic Union (CDU).
Town councillor Detlef Oelsner defended his actions with the group in a council meeting, saying they had shown “civil courage” and that they would have reacted the same way “if he was German.”
“This was no form of self-defence. This was an attack with massive physical violence that clearly went beyond the bounds of the law,” Thomas Dudzak, spokesman for the Left Party in Saxony, told The Local.
As far his party is concerned, the attack was racially motivated, he added.
“One can certainly doubt that they would have reacted the same way had this been a German.”
“The pictures from Arnsdorf are horrible and shameful, it's another incident that makes you shudder,” Daniela Kolbe, general-secretary for the Social Democratic Party in Saxony told The Local.
“The state needs to pay more attention to vigilante groups. What happened in Arnsdorf needs to be decisively acted against. The state is there to look out for security and justice, not some self-proclaimed hobby sheriffs.”
Vigilantes on the rise
Every since the events in Cologne on New Year's Eve, when hundreds of women reported being sexually assaulted by men of Middle Eastern appearance, Bürgerwehr (citizens' defence) groups have been popping up in cities across Germany.
These groups are normally organized over Facebook, and even in quiet towns with almost no crime they can garner thousands of likes, reports the Frankfurter Allgemeine Zeitung.
Especially in the angst-ridden weeks after Cologne, volunteers would patrol the streets, often in pairs and with dogs.
In many cases these organizations are believed to be a guise for far-right groups to carry out their racist ideology in the name of protecting normal civilians.
In January, Berlin daily Tagesspiegel reported on information from the Interior Ministry that seven of these groups across the country had far-right organizations behind them.
In the southwestern state of Rhineland-Palatinate, the leader of the neo-Nazi National Democratic Party (NPD) called for the formation of "citizens' defence units" to protect people against “the rapists and murderers” entering the country.
Members of one Bürgerwehr in the Saxon town of Freital could face terrorism charges, as they are suspected of carrying out arson and explosive attacks on refugee homes.
A 'citizens'-defence group' in Düsseldorf. Photo: DPA
Saxony's ‘racist' police
The eastern state of Saxony, where the Iraqi refugee was tied to the tree, has become notorious for its hostility to refugees and Muslims in general.
State capital Dresden is the home of Pegida, the xenophobic street movement which holds regular rallies in the city centre against “the Islamization of the West.”
The group's leader, Lutz Bachmann, was recently convicted of using hate speech after calling refugees “scum” and “cattle.”
On other occasions, locals in various towns have protested against asylum homes, mobbed buses carrying asylum seekers, and tried to prevent fire services from putting out the blaze of an arson attack on a refugee home.
Saxony's police too have been criticized by the state's deputy minister-president for having a racism problem.
The behaviour of police in Saxony came under scrutiny after disturbing video emerged of officers dragging a terrified refugee from a bus in the town of Clausnitz while a mob of anti-refugees demonstrators blocked the vehicle.
This latest incident is also raising questions about the professionalism of the police in the eastern state, with local media pointing out failures in their reporting and how they reacted to the incident.
The incident occurred on May 21st, but police took over ten days to publicize it, and only did so after video emerged, Bild reports.
Dudzak from the Left Party said that it was "strange that the men were ordered to leave the scene rather than have their identities checked".
"There is proof that the police in Saxony have links to the far-right scene, including to the NPD. One must ask if they have the necessary distance from these groups to be able to perform their jobs properly."
But he cautioned that one should not jump to conclusions about the incident in Arnsdorf too quickly.
"There needs to be an inquiry on the part of the police hierarchy as to why the officers behaved as they did."