In a large pot, combine the octopus, onion, bay leaves, and peppercorns. Cover with water and bring to a boil. Reduce heat and simmer gently for 1 hour or until the octopus is tender.
Remove the octopus from the pot and let it cool slightly. Preheat a grill or grill pan to high heat.
Brush the octopus with olive oil and place it on the grill. Cook for 2-3 minutes on each side or until nicely charred. Slice into pieces and set aside.
If using fresh fava beans, remove them from their pods. Boil the beans in salted water for 3-4 minutes, then plunge them into ice water. Peel off the outer skins.
In a food processor, combine the peeled fava beans, garlic, olive oil, salt, and pepper. Blend until smooth. Adjust the seasoning if necessary.
In a skillet over medium heat, cook the chorizo until it's crispy. Remove the chorizo and set aside, reserving the oil in the skillet.
To the skillet with chorizo oil, add the red wine vinegar, olive oil, smoked paprika, salt, and pepper. Whisk to combine.