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Construction on the Jerusalem museum has been delayed since 2006, when builders unearthed bones on the site, prompting Arab leaders in Israel to sue to stop the project. The Supreme Court found that the location was a Muslim cemetery dating back 300 to 400 years, but had fallen into disuse in 1948, when Israel became a state. The Wiesenthal Center argued that Muslim religious authorities had declared the cemetery abandoned in 1964; opponents questioned the legitimacy of the abandonment.

The court has now declared that since there were no objections to the building of a parking lot over part of the cemetery in 1960, it sees no reason to block the construction of a museum. It added that the museum's builders must consult with Israel's Antiquities Authority on how to rebury any remains unearthed during construction and on creating a barrier between graves and the building's foundation.

Gehry's three-acre project will include two museums, a library/education center, a conference center, and a 500-seat performing arts theater.

Rabbi Marvin Hier, dean of the Wiesenthal Center, said of the Supreme Court ruling that "moderation and tolerance have prevailed." Zahi Nujidat, a spokesman for the Israeli Islamic movement, countered that the decision is "clear religious and ethnic oppression."