As the general's lawyers prepare to challenge the UK Law Lord's ruling in favour of allowing extradition proceedings to continue, Chile's defence minister Jose Florencio Guzman said contracts may be cancelled because Chile had been left "without judicial protection" in both the UK and Spain.

BBC's James Reynolds: They do not see the decision as judicial

"Any bilateral contract requires a guarantee that it will be respected," Mr Guzman said.

Mr Guzman said that an official commission had been appointed to review Chile's contracts.

If the extradition to Spain goes ahead, the general faces a raft of charges in Spain, including genocide and torture, relating to his period in control of Chile following a military coup in 1973.

Wanted: General Pinochet (right) driven from court

Chile insists that Britain and Spain violated Gen Pinochet's immunity as a member of the country's senate.

Some Chilean politicians have argued that only Chile has the right to try the general but many observers have dismissed the proposal as unlikely.

'International court'

Speaking during the start of a European tour to gain support for returning the general home, the President of Chile's Senate, Andres Zaldivar, said that he would propose that an international court determines which country should try him.

Mr Zaldivar said that if Gen Pinochet were to stand trial, it should be in Chile and he rejected suggestions that the country did not have the "capacity" to bring him to justice.

While backing moves to send the general to Chile, Mr Zaldivar said that an international ruling of some form may help resolve the matter.

The Chilean army is currently developing a land-to-land rocket launcher with Royal Ordnance - the UK Government defence contractor - which is a project that Gen Pinochet is reported to have taken a keen interest in.

Chile is also reported to have a contract with a French-Spanish consortium for two submarines worth $400m.