(Reuters) -- The U.S. is facing an unconventional challenge as it seeks to project credibility as a neutral peacemaker between Israelis and Palestinians: a case before the Supreme Court in Washington involving a 12-year-old boy. The nine justices will consider Monday whether the administration of President Barack Obama must follow a law enacted by Congress that allows a U.S. citizen born in Jerusalem to have Israel listed as the birthplace on his or her passport.

What appears to be a dry legal question is a foreign-policy minefield for the U.S. government, which has refused to enforce the law ever since its enactment in 2002. The concern for the U.S. is that the law could be interpreted as an endorsement of Israel’s hotly disputed sovereignty claim over Jerusalem, a holy city for Judaism, Islam and Christianity.

The case was instigated by the parents of Jerusalem-born U.S. citizen Menachem Zivotofsky because they want his passport to state that he was born in Israel. Ari and Naomi Zivotofsky sued on behalf of their then-baby son in 2003.

The legal fight has bounced around the U.S. court system for a decade, an odyssey that included a previous trip to the Supreme Court, which led to a ruling in 2012 on a more technical procedural issue.

The legal question is whether the law is unconstitutional because it infringes on the president’s exclusive right on whether to recognize a foreign nation and under what terms.

The most recent U.S.-brokered peace talks with Israelis and Palestinians broke down in April. Tensions are even higher than usual in Jerusalem after Israel briefly closed access Thursday to a Muslim holy site, the Al Aqsa mosque, following the wounding of a far-right Jewish religious activist.

Negotiations over the status of Jerusalem have long been seen as key to any potential peace settlement. The U.S. has been neutral on the question ever since Israel was founded in 1948.

“The last thing you want is the United States to come in from left field and undermine the credibility of the process,” said Daniel Kurtzer, who served as U.S. ambassador to Israel from 2001 to 2005 and now teaches at Princeton University.

Israel calls Jerusalem its capital, but most countries, including the U.S., do not recognize that claim and maintain their embassies in Tel Aviv. Palestinians want East Jerusalem, captured by Israel during the Six-Day War in 1967, as capital of the state they aim to establish alongside Israel in the West Bank and Gaza Strip.

‘Irreversible Damage’

The State Department’s position is that a loss for the U.S. government would be perceived around the world as a reversal of American policy that could cause “irreversible damage” to the government’s power to influence the peace process, according to court papers. Over the objections of members of Congress, the administration has told the court the president alone gets to make key foreign-policy decisions.

If enforced, the law sends the message that “the United States has concluded that Israel exercises sovereignty over Jerusalem,” administration lawyers said in the court papers. The government currently requires that the passports of any U.S. citizens born in Jerusalem list only the name of the city.

Even some of the Zivotofsky family’s supporters agree that a ruling in their favor could be read within the Muslim world as an endorsement of Israel’s claim for sovereignty over Jerusalem, although they say that would be an incorrect assumption.

“It’s hard to imagine Muslim countries doing anything but object strenuously,” said Marc Stern, general counsel of the American Jewish Committee, one of several U.S.-based Jewish groups that have backed the Zivotofskys by filing friend-of-the-court briefs.

The American-Arab Anti-Discrimination Committee is the only pro-Palestinian group that filed a brief in support of the U.S. government, saying the law discriminates against Americans of Palestinian heritage because it does not allow U.S. citizens born in Jerusalem to list Palestine as their place of birth.

“The law benefits some Americans, but not others,” said Abed Ayoub, the group’s legal and policy director.

Other nations, including Israel, have not filed court papers on either side.

The Zivotofskys are represented by Washington-based lawyers Nathan Lewin and his daughter, Alyza Lewin. They came up with the legal basis for the challenge and said they have worked on the case without charge since 2002. In an interview, Alyza Lewin downplayed the impact the case could have on foreign-policy issues, framing it instead as a personal tale based on a family’s close connection with Israel.

At this point, Menachem Zivotofsky has lived with the case his whole life, Alyza Lewin said. “He is incredibly proud to be born in Israel,” she added.

(Reporting by Lawrence Hurley; Editing by Will Dunham)