Ancient graves have been uncovered by the building work
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Israel's Supreme Court has appointed a mediator to solve a dispute over the building of a museum on the site of a ancient Muslim cemetery in Jerusalem.
The museum is being built by the Simon Wiesenthal Centre, based in the US, to promote tolerance between faith groups.
Muslim clerics petitioned the court to stop work after bones were uncovered during the building work.
The court ordered a suspension of work at the site and gave a former chief justice 30 days to reach a compromise.
Clerics say an old car park on which the $150m (£86m) project is being constructed was built over Islamic Waqf (religious endowment) land which had been confiscated by Israel.
The cemetery is said to contain bones dating back to the earliest decades of Islam in the 7th Century, including companions of the Prophet Muhammad.
"We hope that this mediation period will produce a solution equitable to all parties," the Simon Wiesenthal Centre said in a statement.
The mediator has been named as retired Supreme Court Justice Meir Shamgar.
The Wiesenthal Centre has argued that the cemetery was deemed abandoned under a ruling of a Muslim judge in the Israel's justice system.
But the clerics have found backing from senior Israeli as well as Palestinian figures.
"The initiators of the tolerance museum project could have shown a minimum of tolerance by building it elsewhere, especially since the existence of the cemetery was known to all," said parliamentary speaker Reuven Rivlin last week.