The tablet, which has been dated to the 13th century BC, was found in the effects of Long Island, New York, resident Riven Flamenbaum, who died in 2003. Flamenbaum's children have been claiming they have legal title to the tablet since 2006.
But on Wednesday, the Appellate Division, Second Department, ruled that the Vorderasiatisches Museum is the rightful owner of the tiny gold tablet, which details the construction of a Middle Eastern temple and has been dated to the reign of King Tukulti-Ninurta I of Assyria, who ruled between 1243 and 1207 BC.
The tablet was excavated by a German team of archeologists in 1914 from the base of the Ishtar Temple in what is now northern Iraq. It was then shipped to Germany and ultimately displayed in the Vorderasiatisches Museum from 1934 until the outbreak of World War Two in 1939, at which time it was inventoried and placed in storage.
After the war ended in 1945 the tablet was found to be missing. It turned up decades later in the coin collection of Riven Flamenbaum, an Auschwitz survivor.
When Flamenbaum died in 2003, one of his children contacted the museum to alert it to the tablet's discovery, according to Wednesday's ruling. It took the museum until 2006 to file a claim to the tablet in Surrogate's Court in Nassau County.
The Surrogate's Court ruled in 2010 that the museum had not made a timely claim to the tablet, citing its "inexplicable failure" to report the tablet as stolen or to take steps to find it.
But on Wednesday, the Appellate Division disagreed, saying that the museum "established that it had legal title and a superior right of possession to the tablet."
How the tablet came into Flamenbaum's possession is unknown. In previous court filings, attorneys for the Flamenbaum children said it was possible that Soviet Union soldiers pilfered the tablet from the museum during World War Two and that Flamenbaum acquired it from them.
John Fisher, an attorney for the museum, declined to speculate on how Flamenbaum found the tablet. But attorneys for both parties agreed that the only person who knew the truth of the matter was Flamenbaum.
Fisher said the museum was "very pleased" with the appeals court's decision.
"We feel that justice was done not only for our client but any museum that's seeking to recover lost or stolen art," he said.
A museum representative could not be reached for comment on Thursday.
Seth Presser, an attorney for Flamenbaum's daughter, Hannah Flamenbaum, said that the decision puts the Second Department at odds with other New York courts.
"It's an issue that affects the unimaginable amount of goods on the open market since the turmoil of World War Two," Presser said. "Now we have conflicting decisions between New York courts, and the New York Court of Appeals should make its decision."
Hannah's brother Israel, who was also party to the lawsuit, declined to comment through an attorney.
The case is In the Matter of Flamenbaum, in the Supreme Court of the State of New York, No. 2010-4400.
For Vorderasiatisches Museum: John Fisher of Hamburger Weinschenk & Fisher, and Raymond Dowd and Luke McGrath of Dunnington Bartholomew & Miller.
For Hannah Flamenbaum: Steven Schlesinger and Seth Presser of Jaspan Schlesinger.
For Israel Flamenbaum: David Reilly of Reilly & Reilly.