The arrest of Gen Augusto Pinochet, Chile's former dictator, at a London clinic last weekend was as dramatic as it was unexpected. A true bolt from the blue, it sent shock waves through this country's delicately calibrated return to democracy.

But the arrest, carried out at the request of Spanish judge Baltasar Garzon, who is investigating the deaths and disappearance of Spanish nationals under past military regimes in Chile and Argentina, may also have vital international legal implications. It could help decide the way humanity deals with oppression and state-sponsored human-rights abuse in the next century.

For surviving victims of Pinochet's brutal 16-year rule, which ended in 1989, the arrest was an impossible dream come true.

"We've tried to set the wheels on previous visits and now, miraculously, it has happened," said one human rights activist in London. Only later did the fuller implications sink in. Rumours swept the Chilean community in Britain and worried phone calls began to friends and relatives at home: Pinochet would be expelled from Britain to avoid diplomatic problems, the military in Chile would react with a comeback, a planeload of young pro-Pinochet thugs was on its way from Santiago to "protect" their leader.

Such fears were fed by the first street demonstrations of pinochetistas in Santiago, in fact mostly quite small affairs involving well-dressed women and young people in the main avenue where, by chance, the residences of the British and Spanish stand opposite each other.

Fired by Pinochet's eldest son, also named Augusto, speaking through a megaphone from a truck, the protesters hurled eggs and stones at the residence fences, burned the Union Jack, chanted at the British "pirates" to return "grandpa", and screamed about the abuse of the ex-dictator's "human rights".

"We're going to make life impossible for Spanish and British diplomats," yelled Evelyn Matthei, a senator and daughter of one of Pinochet's former junta members. So far this threat has been manifested only in decisions by the local mayors to remove the embassy staffs' parking spots and not to collect their rubbish.

In response, anti-Pinochet mayors arrived with a garbage truck from the other side of Santiago and cleared the rubbish in solidarity with the embassies, some of their supporters sporting jaunty plastic British bobbies' helmets to emphasise their point.

More seriously, members of Congress from the pro-Pinochet political parties, the Independent Democratic Union and National Renewal, decided to boycott the legislature, bringing it to an effective halt in protest against "the violation of national sovereignty".

President Eduardo Frei's government condemned the move as a self-defeating attempt to stir up the situation. With the majority of the population looking on in bemusement and some fear, the UDI and RN, members of congress, retired military officers and business leaders denounced British perfidy in not recognising Pinochet's claimed diplomatic immunity and calling for the military-dominated National Security Council - a legacy of the Pinochet regime designed to give the armed forces a degree of political veto - into session.

So far, events have gone no further. The armed forces, in particular, while issuing statements protesting against Pinochet's arrest, have kept a low profile, unwilling to damage a transition they see as Pinochet's own achievement.

But in Chile no one is forgetful of the potential for sudden violence lying close beneath the surface. The memory of the assassination attempt against Pinochet by an armed left-wing group in 1986 and the four deathsquad revenge killings that followed hours later, are still fresh. It makes for well founded fears of what could happen if anything serious were to happen to Pinochet's health in European custody.

The government, Catholic church and some cooler opposition heads have expressed fears about what all this means for the country's already long-drawn-out transition to democracy. Insisting, like Tony Blair in Britain, that the issue of Pinochet's arrest is legal and not political, the government is attempting to prevent it becoming a matter of state, while pressing the case for Pinochet's immunity and against extra-territorial jurisdiction by courts such as Judge Garzon's over crimes committed in Chile.

The problem is that Pinochet's personal situation is central to the uneasy pact for the transition worked out between the military and its opponents, now Frei's Christian Democrat and Socialist government, in 1989. Not only did democrats have to swallow a Congress skewed against them by a group of unelected senators representing the military and other institutions, but Pinochet himself was made a senator for life.

Protecting this role and the privileges that go with it, such as the supposed diplomatic immunity to protect the general abroad, is an article of faith for the UDI and RN, thus inextricably intertwining political, legal, personal and state matters.

At the moment, the opposition is still somewhat shell-shocked by the news from London and Madrid. The arrest has united the usually fractious UDI-RN alliance, while Frei's coalition has been put under strain by the official defence of Pinochet.

But there are bitter recriminations among those close to Pinochet about which "traitors" among his advisers were responsible for the worst error of the notoriously foxy general's career - to go to London, just as Judge Garzon's case was gathering pace and, only days after the 25th anniversary of Pinochet's September 11th military coup had put more reminders of past horrors in the world's media than for many years.

But the main reason for the opposition's relative truce towards the government is Frei's determined defence of Pinochet, "not as an individual, but as a senator of the republic". This has included pressing the claim for diplomatic immunity, which is generally considered by experts to be untenable, and possibly even fraudulent, under the Vienna Convention which governs these matters.

It is the other Chilean argument, or the issues behind it, which places Pinochet at the heart of international legal debate about how to deal with gross human rights violations, thus giving his situation an importance which is now dawning on his supporters and the Chilean government. It is the general's misfortune to provide a perfect test case - a former head of government, no less - for questions which have been growing in international law for several years.

Traceable back to the post-second World War Nuremberg Tribunal, these questions are crying out for resolution on the brink of the 21st century. As in much of Latin America after the military dictatorships of the recent past, the issue of how to deal with human rights violations was central to Chile's democratic restoration.

Some 3,000 deaths and disappearances were recorded by the official Truth and Reconciliation report drawn up after the change of government - a report which inspired the similar, but more wide-ranging, investigations in South Africa and elsewhere.

The Chilean answer to these crimes, to which systematic torture and exile should be added and which included notorious murders and murder attempts abroad, in Buenos Aires, Washington and Rome, was "to privilege stability over justice" in the words of noted Chilean sociologist Ricardo Israel. The amnesty imposed by the military junta until 1978 was accepted and names of known perpetrators were excluded from the report.

A handful of cases were tried, leading notably to the jailing of Pinochet's first secret police chief, Gen Manuel Contreras, and his second-in-command. Recently, a judge was named to investigate a number of accusations against Pinochet personally. But, otherwise, the vast majority of cases remain without hope of resolution.

Internationally, meanwhile, there were growing moves to give coherent expression to the principle, in the spirit of Nuremberg, that certain crimes against humanity should be considered under international jurisdiction, rather than being left to national courts.

Massacres in the former Yugoslavia and Rwanda have increased this perception of the need for supra-national courts, leading to the establishment of international tribunals in both cases. The recent agreement in Rome to set up a permanent international tribunal under the auspices of the UN to try crimes against humanity is another example.

What is less clear under international law is whether, in the lack of such international courts, those of individual countries can try crimes committed in others.