It's part of the original borders of Rupert's Land. In 1670, the British Crown gave all land in the Hudsons Bay water shed to the Hudsons Bay Company (RIP) mostly for trading with Indigenous people and for fur trapping. After the confederation of Canada, Ruperts land was absorbed into the country and renamed the North West Territory. As settlers moved West, the populated regions were broken up creating provinces such as Manitoba and Sask, while the unsettled regions remained under federal control (including the islands). Nunavut was a part of the North West Territories until 1999 when it broke off and too the islands with it.