Just from TV, we don't actually know. (Behind the scenes, Phil Segal and Matthew Jacobs did apparently have a backstory, but it didn't make it into the movie, and we never found out what it was.)
According to the novel Lungbarrow, and a later story by Russell T Davies in Doctor Who Annual, Lady President Romana had opened up diplomatic relations with the Daleks, which ended with a peace treaty and the 'Act of Master Restitution'. The Daleks tried the Master, not only for the crimes against the Daleks, but also on behalf of the Time Lords. However, obviously, this was part of the 'cold war' before the actual hostilities of the Last Great Time War; the Daleks were just using this excuse to manipulate the Time Lords, and forge diplomatic relations with them, so they could strike against them more effectively.