The High Court of Justice gave the state three weeks to explain why the security fence in the Bil'in area was not being moved.
Supreme Court President Aharon Barak, Justice Eliezer Rivlin and Justice Dorit Beinish handed down their decision on Thursday afternoon, Army Radio reported.
Bil'in has been the site of weekly demonstrations for the past year.
The village of Bil'in petitioned the court because the fence cuts the village off from some of its land.
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