Costa Rica is asking a United Nations court to order Nicaragua to withdraw its troops from disputed land along the river that forms the border between the two nations.
The International Court of Justice in The Hague began hearing arguments on the issue Tuesday.
Costa Rica accuses Nicaragua of violating international law by putting troops on Costa Rican territory for a dredging project to build a canal.
Nicaragua denies violating Costa Rican territory, saying the work is being done on its own land.
Costa Rican diplomat Edgar Ugalde told the court the action is threatening peace in the region. Costa Rica also says the project is damaging to the area's wetlands and wildlife.
Nicaraguan officials are also scheduled to address the court Tuesday.