Seven months of arbitration to end a bitter dispute over the construction site of Jerusalem's Museum of Tolerance has failed, the head of the Los Angeles-based Simon Wiesenthal Center said Sunday, and the legal battle over the museum's construction is headed back to the High Court of Justice. The construction of the $200 million dollar museum being built by the center hit a snag last year when dozens of Muslim graves were found during excavations at a section of the central Jerusalem site. In February, the High Court issued a temporary order barring construction following Arab appeals, and appointed former Supreme Court president Meir Shamgar to mediate the dispute. But the attempt to reach an out-of-court settlement broke down after Islamic officials rejected an offer by museum officials to renovate the dilapidated cemetery, and to bury any human remains found during construction in coordination with Islamic religious officials, officials said Sunday. "We tried to find a compromise but the Islamic groups were simply unwilling to compromise," said Rabbi Marvin Hier, dean of the center, in a telephone interview from Los Angeles. He added that he never expected the mediation effort to work, and voiced confidence that the court would now rule in favor of construction. "We did not anticipate any compromise by the Islamic groups, and anyone who deals with them on the political level will tell you the same thing," he said. Durgham Saif, a lawyer for the human rights group Karameh, which is fighting the construction project, said Sunday that he had not received official court notification that the arbitration had failed, but confirmed that the museum's offer had been rejected. He added that despite the breakdown in negotiations, he still hoped that Shamgar would put forward a last-minute "innovative compromise." Islamic officials have repeatedly ruled out any construction at the site. The museum, which is being built adjacent to Independence Park, was originally expected to be completed in 2007, a date that is likely to be pushed back due to the ongoing legal wrangling. The site served as the main Muslim cemetery until 1948. The Wiesenthal Center has cited rulings by Muslim courts, most recently 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 Administration and the Jerusalem Municipality, had never been designated as a cemetery by Israeli authorities and that for three decades it was used as parking lot. "We have a very strong case on legal precedent," he said. The museum, which is being designed by 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 people of all faiths.