The row over Hans Island, a barren 1.3 square kilometre rock that sits between Canada's Ellesmere Island and Greenland, dates back to 1973 when the border was drawn between Canada and Greenland, part of the Danish kingdom.
The two sides are holding talks this week in Ilulissat, Greenland on the issue.
“The task force will explore options and provide recommendations on how to resolve outstanding boundary issues between the two nations,” said a joint statement.
On the surface the spat over a snow-covered uninhabitable island seems absurd, but has become essential for economic development and environmental stewardship of the Arctic.
Danes and Canadians have visited it often over the past four decades to lay claim to it.
In 1984, Canadian troops planted their nation’s flag on the island and left another potent symbolic marker: a bottle of Canadian whisky.
Not prepared to take that lying down, Denmark's minister of Greenland affairs later visited the barren rock, replacing the Canadian items with a Danish flag and a bottle of snaps, as well as a note saying “Welcome to the Danish island.”
These apparently light-hearted exchanges eventually led to diplomatic protests, vivid online campaigns and even a Canadian call to boycott Danish pastries.
In 2012, the two nations reached a tentative deal on where to draw the maritime boundary in the Lincoln Sea, a body of water in the far north-eastern Canada.
But the fate of Hans Island and overlapping economic zones was not fully resolved.
With the onset of global warming more ships are expected to sail between Ellesmere and Greenland, as the area opens up to mining, fishing, and oil and gas drilling operations.
Denmark fears that losing the ownership battle would undermine relations with Greenland, while Canada worries that a loss would weaken its negotiating position in a more consequential dispute with the United States over the Beaufort Sea, in far northwestern Canada.