In its ruling on Monday, the supreme court rejected the church's appeal against a district court's 2017 approval of the same deal.
Three companies linked to a group named Ateret Cohanim in 2004 secured the long-term lease of three buildings owned by the Greek Orthodox Church - the Petra hostel and the New Imperial Hotel, both located by the Jaffa Gate, and a residential building in the Muslim Quarter.
Ateret Cohanim works to "Judaise" east Jerusalem in its entirety by purchasing real estate in the city's Palestinian areas through front companies.
The deal made Ateret Cohanim the owner of the majority of the properties between the Old City's Jaffa Gate and Arab market.
A source close to the Greek Orthodox patriarchy of the early 2000's told AFP in 2017 that the church was unaware of the land sale.
The sale triggered Palestinian anger and led to the 2005 dismissal of Patriarch Irineos I.
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The seizure of the historic Jaffa Gate properties by extremist settler organisations is a new catastrophe to the misfortunes suffered by the Christians in this Holy City - Palestinian Greek Orthodox Archbishop Atallah Hanna |
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In a statement on Tuesday, Palestinian Greek Orthodox Archbishop Atallah Hanna described the Supreme Court's decision as "illegal and illegitimate".
"The seizure of the historic Jaffa Gate properties by extremist settler organisations is a new catastrophe to the misfortunes suffered by the Christians in this Holy City," he said, calling for the deal to be cancelled in a lawful manner.
The Greek Orthodox Church is the largest and wealthiest church in the Holy Land.
Its Jerusalem patriarchate commands massive wealth, largely in land portfolios in Israel, the occupied West Bank and Jordan, with Palestinians often accusing it of selling or leasing properties to Israel.
Israel took over mainly Palestinian east Jerusalem in the 1967 Six-Day War and later annexed it in a move never recognised by the international community.
It now considers the entire city its capital, citing the Jewish historical and biblical connection there.
The Palestinians see east Jerusalem, which includes the Old City, as the capital of their future state.
Some 320,000 Palestinians live in east Jerusalem, while the Israeli settler population there has grown to 210,000.
The Jerusalem district court had dealt with claims against the deal for nine years before approving it.
The supreme court said the earlier ruling was sound and "the appeal is rejected."
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