Adriana Elcira Rivas, who emigrated to Australia in the late 1970s and worked as a nanny in Bondi, has been locked in a seven-year legal battle since her arrest by NSW Police in 2019 at the request of Chile.
She is accused of working for intelligence services during the dictatorship of Augusto Pinochet and playing a role in the disappearance and torture of seven people, including a woman who was five months' pregnant.
Rivas, now in her 70s, denies the allegations and has fought for years to block her extradition to the South American nation on seven charges of aggravated kidnapping.
In her last-ditch fight in the Federal Court on Monday, her barrister said the Australian government failed to appreciate how the offences had been characterised by Chile.
"It is evident that the Chilean legal system would prosecute or sentence the applicant on the basis she committed crimes against humanity," Sean Baron Levi argued.
Such a prosecution means Rivas could theoretically face the death penalty, he added while noting there was no suggestion such a charge would actually be sought.
Chile had provided assurances to the Australian government the elderly woman would not be tried for any offences other than the seven counts of aggravated kidnapping, the court was told.
Extradition was sought for those charges, which allegedly took place in the context of broader crimes against humanity, Australian government lawyer Trent Glover SC said.
Kidnapping was an offence in both Chile and Australia at the time of the alleged offences and thus satisfies the requirements of extradition, unlike crimes against humanity, he said.
If kidnapping is the proper characterisation of the charges, then the extradition is still invalid because the time limitation on prosecuting such offences had lapsed, the ex-nanny's barrister argued.
However Chile advised the Australian government the statute of limitations would not apply to her charges because they fell under the definition of crimes against humanity, the court was told.
The characterisation of Rivas' alleged offending is the central question in her two-day legal battle to remain in Australia.
The courtroom was filled with families and loved-ones of people who were killed or vanished during the Pinochet regime.
Adriana Navarro, who represents the families, said they were eager to see a speedy resolution to the matter after years of waiting for justice and truth.
"It's been a difficult task for the families ... we haven't been able to obtain much information," she said outside court.
"We know there's a commitment now by the Australian government to send Rivas to Chile and that's what we want, that's what the families want."
Answers have been elusive for many, with Ms Navarro noting 1100 Chileans' remains have still not been found after 50 years.
"We have a very good idea of what happened to them and we think Ms Rivas may do too," she told AAP.
Rivas is accused of being part of a Direccion de Inteligencia Nacional brigade that physically and psychologically tortured members of the communist party, which opposed Pinochet's regime.
Pinochet violently overthrew the elected socialist government in a 1973 coup and ruled the country with an iron fist until 1990, outlawing political parties and exiling thousands of dissidents.
About 40,000 people were killed, tortured or imprisoned for political reasons during the dictator's reign.
