The Treaty of Madrid was an agreement concluded between Spain and Portugal on 13 January 1750. In an effort to end decades of conflict in the region of present-day Uruguay, the treaty established detailed territorial boundaries between Portuguese Brazil and the Spanish colonial territories to the south and west. Portugal also recognized Spain's claim to the Philippines while Spain acceded to the westward expansion of Brazil. The treaty included a mutual guarantee of support in case either state's American colonies were attacked by a third power.

Colonia del Sacramento is a city in southwestern Uruguay, by the Río de la Plata, facing Buenos Aires, Argentina. It is one of the oldest towns in Uruguay and the capital of the Colonia Department. It has a population of around 27,000.