The woman has been on the run since 1979. The Spanish judicial authorities claim that in 1981 she was a member of the Vizcaya Commando committing atrocities that killed six.
A week ago a Belgian judge approved Pepona's extradition, but this decision has now been reversed by a higher judge. Her defence counsel argued that the offences had become prescribed and claimed her arrest was a propaganda stunt.
The woman remains in custody while the prosecutor decides whether or not to take the matter to the Court of Cassation.