In 2001, Nicaragua filed a complaint to the International Court of Justice in The Hague against Colombia where it claimed that Colombia's possessions in the western Caribbean Sea were unfair and that Nicaragua should be the fair holder of these territories. The territory Nicaragua wants is the entire San Andres Archipelago which includes the islands of San Andres, Providencia, Santa Catalina, as well of several other islets and banks, and more than 75,000 km2 of water. Nicaragua also wants a large portion of water east of the 82nd meridian (the boundary between Colombian and Nicaraguan waters). Nicaragua said Colombia was being "imperialist and expansionist". The area Nicaragua claims is rich in oil and gas and could benefit economically from it.
But first, what are the general rules? A country has sovereignty over waters that are within 200 nautical miles of its coast. Of course, the waters around the islands and the islands themselves are closer to Nicaragua than they are to Colombia, however, Colombia does have the right to those waters because of the islands it possesses in that area.
Now the facts about the case: Colombia and Nicaragua signed a bilateral treaty in 1926 in which both countries agreed on the current established boundaries. However, in 1980 Nicaragua said the treaty was invalid. Before both Nicaragua and Colombia became independent in the early 19th century, the Spanish possessions in the Americas were divided into several Viceroyalties or Captaincies, the equivalent of separate colonies (similar to how the British colonies were divided in North America). The disputed territory was part of the Captaincy of Guatemala (to which Nicaragua is a succesor) before 1803. However, on November 20th, 1803, the King of Spain ordered that the territory be transferred to the Viceroyalty of Nueva Granada (present-day Colombia). Therefore, when Colombia became independent from the Spanish Empire in 1819, it kept the territory.
Nicaragua claims it has the right over the islands and the surrounding water for several reasons: First, it says that the treaty signed in 1926 is invalid because at the time the treaty was signed, Nicaragua was under US invasion, so the treaty was signed under US pressure. Second, it says that the 1803 order was never implemented and that it was actually replaced by a new order in 1806. Finally, Nicaragua says that Colombia's territory in the Caribbean Sea is way too big and disproportionate compared to those of other countries. It also says that the Colombian Navy had intimidated and captured several Nicaraguan fishing vessels that roamed around the area.
Colombia responded to all of Nicaragua's claims. According to Colombia, the treaty that was signed in 1926 should be valid because it was later ratified in 1930, after the US troops had left Nicaragua. Regarding the new order in 1806, Nicaragua never quotes such order in the document they presented to the ICJ, while the 1803 order is quoted on the document. Nicaragua says that Colombia's territory is way too big, well the established boundaries were all agreed to on bilateral treaties with all the countries that Colombia has a maritime border. So if the disputed territory was indeed part of the Viceroyalty of Nueva Granada at the time of Colombia's independence, then the territory does lawfully belong to Colombia.
On November 2012, the International Court of Justice have their verdict. It was terrible loss that caused outrage in the whole country. The ICJ ruled that although all the disputed islands did belong to Colombia, 75,000 km2 of water, rich in oil and gas, and also one of the largest marine reserves in the world, should be transferred to Nicaragua. President Juan Manuel Santos called the verdict unfair and baseless. Whether Colombia will accept the Court's judgement is still being decided. I do believe the judgement is unfair because their was a previous treaty settling the dispute which Nicaragua considers invalid. Now, many of Colombia islands are surrounded by Nicaraguan waters. See map.
