Though Israel‘s War of Independence was not yet over, by August 1948 it was clear that Jerusalem would be divided with East Jerusalem ruled by Transjordan and West Jerusalem by Israel. The cabinet met to clarify the legal status of the residents of the the Israeli-controlled part of town and how they were related to the State of Israel. David Ben-Gurion, speaking as the Minister of Defense, decreed:
1. That the area of Jerusalem was defined as that controlled by the army on August 2, 1948, or future changes;
2. Israeli law would apply on that territory;
3. The populace was called upon to obey orders of the military commander in matters of public peace;
4. The declaration would be made public;
5. It would apply retroactively to midnight on May 14th, or to whatever date any particular area had been occupied thereafter.
Source: Israel State Archives