Israel's pre-1967 borders reflected the deployment of Israeli and Arab forces on the ground after Israel's War of Independence in 1948. Professor Judge Stephen M. Schwebel, the former President of the International Court of Justice clarified in his writings Justice in International Law that the 1949 armistice demarcation lines are not permanent borders:

"The armistice agreements of 1949 expressly preserved the territorial claims of all parties and did not purport to establish definitive boundaries between them."[1]

"Taking into consideration that the Provisional Government of Israel has indicated its acceptance in principle of a prolongation of the truce in Palestine; that the States members of the Arab League have rejected successive appeals of the United Nations Mediator, and of the Security Council in its resolution 53 (1948) of 7 July 1948, for the prolongation of the truce in Palestine; and that there has consequently developed a renewal of hostilities in Palestine."[2]

The demarcation line that emerged in the aftermath of the war was drawn up under the auspices of United Nations mediator Dr. Ralph Johnson Bunche. That new boundary largely reflected the ceasefire lines of 1949 and was labeled the "Green Line" merely because a green pencil was used to draw the map of the armistice borders.

 

[1] Justice in International Law Selected Writings of Judge Stephen M. Schwebel (Cambridge: Cambridge University Press, 1994). Professor, Judge Schwebel served on the International Court of Justice since January 15, 1981. He was Vice-President of the Court from 1994 to 1997 and President of the Court from 1997 to 2000. Professor Schwebel is former Deputy Legal Adviser of the United States Department of State and Burling Professor of International Law at the School of Advanced International Studies of The Johns Hopkins University (Washington). Opinions quoted are not derived from his position as a judge of the ICJ. 

[2] See: UN Security Council Resolution 54 (1948)