Peruvian President Ollanta Humala has officially recognized an administrative district in a border area which has been at the center of a territory dispute between his nation and Chile.

Responding to the Peruvian government's move to create a new district in the disputed border area, Chile has voiced their concern, saying that they reject the law because it affects a Chilean territory.

The BBC reports that Peru maintains that the residents of the new district of the La Yarada-Los Palos district will now be able to elect their own representatives and take part in decisions regarding their own welfare.

The La Yarada-Los Palos area has a population of around 15,000 people.

Arguments over the border area began in 2014 after the International Court of Justice gave Peru an area of sea which amounted to 7,700 square miles. In 2008, Peru filed a case regarding the border dispute with the Hague. The point of the court ruling was to put a stop to decades of political tensions stemming from the small border area between the two Latin American nations.

As the recent disagreement shows, the neighboring countries still harbor a deep disagreement about land issues.

The Chilean government has issued a stern note rejecting Peru’s move to officially recognize the disputed region. "Chile has made consistent efforts to generate a favourable climate for constructive bilateral relations," the note says, adding that, "This move causes significant damage."

President Humala believes that the creation of this new district will help to promote decentralization as well as democracy in Peru. "It is necessary to give priority to the development of border zones and other areas of the country that have been historically neglected," said Humala.

According to Agence France-Presse, Chile has claimed that Peru sent troops to the disputed border region. Lima denies sending any troops.