The Jerusalem Magistrate's Court denied a restitution claim filed by the family of the suicide bomber who carried out the 2001 attack on the Sbarro restaurant in Jerusalem.
The family demanded monetary compensation from the State for razing their house, in the West Bank city of Jenin.
Izz al-Din Shuheil al-Masri blew himself up in the middle of the Sbarro restaurant on August 9, 2001. The deadly attack, which included a 70kilogram (15-pound) explosives belt rigged with nails, nuts and bolts, claimed the lives of 15 people, including seven children, and left 130 wounded.
The Israel Defense Forces was ordered to tear down the al-Masri family home one year later.
Judge Yoel Tsur, presiding over the hearing, ruled Monday that razing and sealing off of terrorists' homes was a legal act of war. Tsur cited a Supreme Court ruling stating that such an act could be used as a measure of deterrence and that it complies with international law.
The plaintiffs, continued Judge Tsur, were given ample time to move out and remove their belongings from the house and the house was torn down, using explosives, only after the soldiers canvassed the premises and ensured it was empty.