The Santiago Appeals Court’s decision to strip Pinochet’s immunity from prosecution opens the way for the 89-year-old to be charged for hiding millions of dollars in secret foreign bank accounts.
But crucially the same court dismissed nine kidnapping charges and one murder charge against him.
They related to a case known as Operation Condor, which involved cross-border efforts by South American dictators in the 1970s to kill dissidents.
The decision was roundly criticised by his opponents.
“The judges cannot let Pinochet be a thief, but they do not mind if he is a murderer,” said human rights lawyer Eduardo Contreras.
“It seems as though millions of dollars are worth more than the blood of thousands of Chileans who fell in Operation Condor.”
The former general, whose actions continue to divide Chile, has never been tried for the 3,000 murders and abductions that occurred during his 17-year regime.
The judges cited Pinochet’s health in Tuesday’s ruling, making it the second major human rights case against him to be thrown out on those grounds.
“It is fair to conclude that Augusto Pinochet suffers neurological problems that make him unable to defend himself in a legal process. In these conditions maintaining the process would violate his rights to due process,” the panel said in its unanimous ruling.
Operation Condor was the second big human rights case in which Pinochet lost his immunity and the second to be thrown out due to weak health.
In 2000 he lost immunity and was charged in the Caravan of Death case, which involved a tour of Chile by army officers after the 1973 coup to execute dozens of opponents. The Supreme Court threw out those charges in 2002, citing his dementia.
A Chilean inquiry found Pinochet and his family had hidden up to US$17m (A$22m) in more over 100 foreign bank accounts, often under false names.
The corruption charges Pinochet is likely to face may ultimately be more damaging to his image than the human rights charges.
His supporters have always argued he was a selfless soldier defending the country against socialism.