A bitter dispute over the construction site of Jerusalem's Museum of Tolerance is headed back to Israel's highest court on Wednesday after seven months of legal arbitration failed to resolve the controversy. The construction of the $200 million dollar museum, which is being built by the Los Angeles based Simon Wiesenthal Center, hit a snag two years ago after dozens of Muslim graves were found on a section of the museum's planned central Jerusalem site during required groundbreaking excavations. Last year, the High Court of Justice issued a temporary order barring construction at the site following Arab appeals against the building, and appointed former Supreme Court president Meir Shamgar to mediate the dispute. But the attempt to reach an out of court settlement broke down in September after Islamic officials rejected an offer by the museum to move the bones to a nearby neglected Muslim cemetery and renovate it. The center pointedly refused to relocate the museum. "The Muslim side just said no, no and no and didn't come up with any suggestion short of moving the museum somewhere else," said Rabbi Marvin Hier, dean of the center, in a telephone interview Monday from Los Angeles. He noted that the bones in question were found on 12 percent of the planned museum site, and that that the organization had offered to pay for the burial of the bones that were found in that area, and only build above ground there. Hier added that the center has spent over $1 million in legal fees on the case to date. Durgham Saif, a lawyer for the human rights group Karameh, which is fighting the construction project, said Monday that the compromises put forward by the Center were not serious, adding that they were forcing the court to make a decision on the issue. "The whole issue of compromise is over," he said. A three-justice panel will now hear the case, Saif added. The center will ask the court this week to allow construction at the site to continue. Islamic officials have repeatedly ruled out any construction at the site. The museum, which is due to be adjacent to Independence Park, was originally expected to be completed in 2007, a date that is certain to be pushed back now due to the ongoing legal wrangling. The site in downtown Jerusalem served as the main Muslim cemetery until 1948. The Wiesenthal Center has cited rulings by Muslim courts, the most recent in 1964, that canceled the sanctity of the site because it was no longer used. Hier noted that the site, which was given to the center by the Israel Lands Authority and the Jerusalem Municipality last decade, had never been designated by Israeli authorities as a cemetery, and that for three decades it was used as parking lot. He said throughout the Arab world, including in the Palestinian territories, there has been extensive building on abandoned cemetery sites. "We have a very strong case on legal precedent," he said. The museum construction site was dedicated with great fanfare in 2004, with top government officials and California Gov. Arnold Schwarzenegger in attendance. The museum, which is being designed by the world-renowned architect Frank Gehry and will include a theater complex, conference center, library, gallery, and lecture halls, seeks to promote unity and respect among Jews and between people of all faiths.