A ruling against Netanyahu would likely trigger a snap election, the fourth since April 2019, as the country grapples with the coronavirus crisis and its economic fallout.
Netanyahu and his main rival Benny Gantz signed an agreement last month to form a unity government under which they would take turns leading Israel after three elections that neither of them won.
In power for more than a decade and currently head of a caretaker government, right-wing Netanyahu will serve as prime minister of a new administration for 18 months before handing the reins to centrist Gantz, according to the unity deal.
The pact has support from a majority in parliament. But several groups, including opposition parties and democracy watchdogs, have petitioned Israel’s highest court to nullify the deal and bar Netanyahu from leading the government, citing the criminal proceedings against him.
Responding to the petition, Israel’s Attorney General Avichai Mandelblit wrote to the court saying that there was no sufficient legal ground to disqualify Netanyahu.
He described the case as a “head-on collision” between “on one side the most basic democratic principle of honoring the will of the majority … (and) on the other integrity in public service, specifically among elected officials.”
Eleven justices, wearing face masks and separated by screens as coronavirus precautions, presided over the discussion.
A small group outside the court, also following social distancing guidelines, carried signs and Israeli flags to protest against government corruption.
Some Israeli analysts have said the court, cast by Netanyahu loyalists as liberal and interventionist, was unlikely to bar the premier from heading a new government.
A ruling is expected to be announced by Thursday.
Netanyahu, Israel’s longest-serving prime minister, was indicted in January on charges of bribery, fraud and breach of trust. He denies any wrongdoing in all three cases against him and says he is a victim of a political witch-hunt.
Netanyahu’s trial is due to start on May 24.
Israeli law says a prime minister under indictment is not obligated to step down until a final conviction. But legal some experts say there are legal precedents suggesting elected officials indicted with charges that carry moral turpitude should resign.
(Reporting by Ari Rabinovitch; Editing by Maayan Lubell and Edmund Blair)