The descendents of Haj Amin al-Husseini, who led terror attacks on the Jewish community in Mandatory Palestine and collaborated with the Nazis while serving as mufti of Jerusalem, would like to build a peace and coexistence center for Arabs and Israelis on land the mufti owned.

The family is seeking, at least in part, to keep the land from being used to house settlers.

The land, on which the Shepherd’s Hotel in East Jerusalem was later built, was sold by Israel’s Custodian of Absentee Property, and ended up in the hands of U.S. businessman Irving Moskowitz, known for his support of settlers.

Israel’s High Court of Justice on Monday denied the petition submitted by Muna Husseini, the granddaughter of al-Husseini against the sale.

The High Court accepted the position of the state who claimed that the petition against the sale of the property, that used to belong to the mufti, was submitted too late by the absentee landlords.

Now, the way is clear for Moskowitz to carry out his plan to set up a new Jewish neighborhood on the grounds. The act is expected to trigger Palestinian protests and international criticism.

Muna Husseini, a 45-year-old U.S. citizen who lives in England, arrived from London Sunday ahead of a High Court of Justice hearing over the nine-dunam compound in the Sheikh Jarrah area of East Jerusalem.

Muna Husseini told Haaretz that the Husseini family, which still claims ownership of the land, had conveyed its proposal for a coexistence center to Moskowitz, who rebuffed it.

She said the family wants to donate the land to the cause of the advancement of intercultural and inter-religious dialogue, and is also seeking to prevent the establishment of a settlement there.

Muna Husseini said Husseini descendents living in the United States, Canada and Australia have reported the family’s proposal to their governments and have warned that the establishment of a Jewish neighborhood on the land will increase controversy in the city.

The 18 grandchildren of Haj Amin al-Husseini, one of the most prominent Arab leaders in Mandatory Palestine, have decided jointly to give up their rights to the land, which they believe were not abrogated by the custodian’s sale of the land, and say they are expecting Israel to turn the compound into a symbol of peace.

Israel Prize-winning sculptor Dani Karavan has volunteered to build an artistic installation at the site that will symbolize the desire for peace, together with Israeli and Palestinian artists.

The Jerusalem municipality’s 2009 decision to allow a Jewish neighborhood to go up on the site sparked harsh criticism of Israel in the United States and the European Union. Washington demanded that Prime Minister Benjamin Netanyahu stop the project on the grounds that it disrupted the demographic balance in East Jerusalem and thwarted efforts to renew negotiations with the Palestinians.

In a petition to the High Court of Justice in early 2011, Husseini said the Custodian of Absentee Property did not have the right to sell the land, because the absentee property law was not intended to apply to East Jerusalem. The petition also claimed the lot was sold without a tender and without due process to a company that transfered the rights to the Ateret Cohanim association, which sold the land to a California company called C&M Properties, owned by Moskowitz.

The High Court agreed to discuss the question of ownership. The petition states that the Husseini family plot was rented out at the beginning of the 1960s and that the Shepherd’s Hotel was subsequently built on it.

The hotel was demolished last year.

According to Mona Husseini, the Custodian of Absentee Property rejected a request by the Husseini family in the early 1980s to purchase the land.

The State Prosecutor’s Office has asked the High Court to reject the Husseini family petition on the grounds that it was not submitted in a timely fashion and that the law on absentee property was enacted before East Jerusalem was annexed and does apply to absentee land in the territories.