In the
United States Court of Appeals
For the Seventh Circuit

No. 99-3823

EDWARD HAVEN and ALLEN WELBEL,

Plaintiffs-Appellants,

v.

RZECZPOSPOLITA POLSKA, SKARB PANSTWA,
State Treasury of Poland, POWSZECHNY
ZAKLAD UBEZPIECZEN S.A.,

Defendants-Appellees.



Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 99 C 1727--Milton I. Shadur, Judge.


Argued April 6, 2000--Decided June 8, 2000



      Before POSNER, Chief Judge, and FLAUM and RIPPLE,
Circuit Judges.

      RIPPLE, Circuit Judge. Edward Haven and Allen
Welbel brought this action seeking the return of
property allegedly belonging to them and their
families. They claim that the property was seized
by the Polish government after World War II. The
district court dismissed the action on the ground
that it lacked subject matter jurisdiction. For
the reasons set forth in the following opinion,
we affirm the judgment of the district court.

I
BACKGROUND/1

      Edward Haven and Allen Welbel both emigrated
from Poland to the United States after World War
II because of the Polish government’s anti-
Semitic policies. Both of them left behind real
property owned by their families. Mr. Haven’s
property was insured by Powszechny Zaklad
Ubezpieczen ("PZU"), a Polish insurance company.
Mr. Haven and Mr. Welbel allege that their family
lands were illegally seized by the state, and Mr.
Haven also alleges that PZU failed to honor its
insurance contract. PZU itself was nationalized
by Poland after World War II.

      In 1960, Poland and the United States entered
into a treaty by which Poland agreed to
compensate United States nationals for property
seized by Poland after World War II (the
"Treaty"). The Treaty provided that Poland would
pay $40,000,000 in full settlement of all claims
made by nationals of the United States. The
United States set up an administrative procedure
by which its nationals could obtain a portion of
the settlement.

      In March 1999, Mr. Haven and Mr. Welbel brought
this action in the district court./2 The
complaint sought the return of property and
damages from the Republic of Poland and the State
Treasury of the Republic of Poland (collectively
"Poland"). It also sought damages from Poland for
interfering with PZU’s contracts and from PZU for
failing to perform its contracts. Mr. Haven and
Mr. Welbel served process on the Polish
government on May 7. On July 8, the Polish
Consulate in Chicago delivered a letter to the
district court, purporting to express the Polish
Ministry of Justice’s view that service was
improper under the Convention on the Service
Abroad of Judicial and Extrajudicial Documents in
Civil or Commercial Matters (the "Hague
Convention"). The district court postponed a
default hearing scheduled for July 12, and on
July 13 counsel for Poland and PZU entered an
appearance.

      On August 10, Poland and PZU filed a motion to
dismiss the case on several grounds, including
lack of subject matter jurisdiction due to
sovereign immunity. There is no dispute that all
of the defendants in this case are "foreign
states" within the meaning of the 1976 Foreign
Sovereign Immunity Act ("FSIA"), 28 U.S.C. sec.
1602 et seq. The district court entered an order
on August 24 holding that the FSIA could be
applied retroactively to claims arising before
its passage. On September 29, the district court
ruled that it lacked subject matter jurisdiction
because the action did not fall within any of the
exceptions to the general rule that foreign
sovereigns are immune from suit in United States
courts. First, the court held that the Polish
Consulate’s July 8 letter was not a knowing
relinquishment of rights that waived sovereign
immunity./3 Second, it held that the Treaty had
not expressly waived sovereign immunity./4 Third
and finally, the district court found that PZU
had not waived its sovereign immunity by
undertaking commercial activity in the United
States.

II

DISCUSSION
       We review de novo a district court’s dismissal
for lack of subject matter jurisdiction. See
Fedorca v. Perryman, 

, 239 (7th Cir.
1999); Kaplan v. United States, 

,
472-73 (7th Cir. 1998). Foreign sovereigns
historically enjoyed immunity from common law
suit in United States courts. See In re Air Crash
Disaster Near Roselawn, Ind., 

, 945-46
(7th Cir. 1996); Goar v. Compania Peruana de
Vapores, 

, 425-26 (5th Cir. 1982).
The FSIA provides a statutory codification of
that immunity. See Verlinden B.V. v. Central Bank
of Nigeria, 

, 488 (1983); Employers
Ins. of Wausau v. Banco De Seguros Del Estado,

, 941 (7th Cir. 1999); Wolf v.
Federal Republic of Germany, 

, 540-41
(7th Cir. 1996). The FSIA also provides
exceptions to the rule of sovereign immunity. See

; 

.
Because those exceptions are in derogation of the
common law, we must not read them broadly.
Statutes in derogation of the common law are
narrowly construed. See Norfolk Redevelopment &
Housing Auth. v. Chesapeake & Potomac Tel. Co.,

, 35 (1983); In re Liberatore, 

, 85 (2d Cir. 1978); Picker v. Searcher’s
Detective Agency, 

, 1319 (D.C. Cir.
1975).

A.

      Mr. Haven’s and Mr. Welbel’s first argument that
jurisdiction is appropriate relies on the letter
mailed to the district court by the Polish
Consulate. Mr. Haven and Mr. Welbel contend that
this letter brings Poland within an exception to
sovereign immunity:

A foreign state shall not be immune from the
jurisdiction of courts of the United States or of
the States in any case in which the foreign state
has waived its immunity either explicitly or by
implication, notwithstanding any withdrawal of
the waiver which the foreign state may purport to
effect except in accordance with the terms of the
waiver.

28 U.S.C. sec. 1605(a)(1). If a sovereign files a
responsive pleading without raising the defense
of sovereign immunity, then the immunity defense
is waived. See Frolova v. Union of Soviet
Socialist Republics, 

, 377 (7th Cir.
1985) (per curiam); accord Drexel Burnham Lambert
v. Committee of Receivers, 

, 326 (2d
Cir. 1993); United States v. Crawford Enters.,

, 378-79 (S.D. Tex. 1986). The
letter sent by the Polish Consulate to the
district court did not raise any sovereign
immunity defense; therefore, if the letter was a
responsive pleading, sovereign immunity has been
waived. Mr. Haven and Mr. Welbel argue that the
letter was a responsive pleading.

      Rule 7 of the Federal Rules of Civil Procedure
explains that only certain filings may be
considered responsive pleadings, including a
complaint, an answer, a reply to a counterclaim,
an answer to a cross-claim, a third-party
complaint, and a third-party answer. "No other
pleading shall be allowed." Fed. R. Civ. P. 7. A
responsive pleading need only be filed after
proper service has been made. See Silva v. City
of Madison, 

, 1376 (7th Cir. 1995)
("[A] responsive pleading is required only after
service has been effected and the party has been
made subject to the jurisdiction of the federal
courts."); Bowman v. Weeks Marine, Inc., 936 F.
Supp. 329, 336-37 (D.S.C. 1996).

      Although objections to service of process may be
made in a responsive pleading, they may also be
made through a Rule 12 motion to dismiss. As Rule
12(b) explains:

Every defense, in law or fact, to a claim for
relief in any pleading . . . shall be asserted in
the responsive pleading thereto if one is
required, except that the following defenses may
at the option of the pleader be made by motion: .
. . (5) insufficiency of service of process.

Fed. R. Civ. P. 12 (emphasis added). We have
acknowledged that the insufficiency of service of
process may properly be raised through a motion
to dismiss. See, e.g., Troxell v. Fedders of
North Am., Inc., 

, 382-83 (7th Cir.
1998) (affirming district court’s grant of
defendant’s "motion to dismiss" for insufficient
process). A motion to dismiss is not a responsive
pleading. See Duda v. Board of Educ. of Franklin
Park, 

, 1056-57 & n.2 (7th Cir.
1998); Camp v. Gregory, 

, 1289 (7th
Cir. 1995); Scam Instrument Corp. v. Control Data
Assoc., 

, 889 (7th Cir. 1972)./5

      The Federal Rules of Civil Procedure also
specifically contemplate that foreign sovereigns
will be allowed to object to the adequacy of
service. Rule 4, which governs service of
process, requires that service on foreign
sovereigns comply with 28 U.S.C. sec. 1608. See
Fed. R. Civ. P. 4(j)(1). The Hague Convention
itself is attached to Rule 4 as an appendix.
Article 4 of the Convention allows foreign
sovereigns to object to the service of
process./6

      The Federal Rules of Civil Procedure, and our
case law interpreting those rules, require us to
hold that sovereign immunity was not waived by
the Polish Consulate’s letter. The only court
filing that can waive a sovereign immunity
defense is a responsive pleading that does not
raise the defense. The Consulate’s letter
objecting to the propriety of service is properly
treated as a motion to dismiss, not a responsive
pleading. See Hirsh v. State of Israel, 962 F.
Supp. 377, 380 (S.D.N.Y.) ("Although an implied
waiver may be found where a foreign state files a
responsive pleading that fails to raise the
defense of sovereign immunity, Germany’s letter
is not a ’responsive pleading.’" (citation
omitted)), aff’d, 

(2d Cir. 1997)./7
Indeed, until it was established that service of
process had been properly executed, Poland was
under no obligation to file any responsive
pleading. See 

. Because the
letter was not a responsive pleading, its failure
to raise the sovereign immunity defense did not
compromise Poland’s ability to raise that
defense.

      Our holding that Poland’s letter objecting to
service of process did not waive sovereign
immunity is consistent with Congress’ requirement
that waiver on the part of foreign sovereigns be
knowing. We have written:

Congress anticipated, at a minimum, that waiver
would not be found absent a conscious decision to
take part in the litigation and a failure to
raise sovereign immunity despite the opportunity
to do so. The case law evidences a reticence to
find a waiver from the nature of a foreign
state’s participation in litigation.

. Poland’s objection to
the adequacy of service was not "a conscious
decision to take part in the litigation"; indeed,
it was an indication by Poland that, at that
point, it did not intend to participate in the
litigation. Thus, Poland’s letter objecting to
the service of process should not waive its
sovereign immunity.

      We also cannot agree with Mr. Haven’s and Mr.
Welbel’s contention that their counsel’s phone
conversations with employees of the Polish
Consulate led to a waiver of Poland’s sovereign
immunity. Counsel for Mr. Haven and Mr. Welbel
telephoned the Polish Consulate, and counsel
claims that two Polish Consulate employees spoke
to him without raising the sovereign immunity
defense. Mr. Haven and Mr. Welbel argue that the
district court improperly ruled that the
employees did not have the authority to waive
sovereign immunity. The district court found
there was nothing to suggest that those employees
had the authority to waive Poland’s sovereign
immunity. Even if those employees did have the
authority to waive sovereign immunity, they could
not do so in a telephone conversation. A
telephone conversation is not a responsive
pleading. Thus, we decline to find waiver from
any communications between counsel and the
Consulate.

B.

      Mr. Haven and Mr. Welbel next argue that the
district court had jurisdiction because the
Treaty waived Poland’s sovereign immunity. The
district court initially assumed that Mr. Haven
and Mr. Welbel were not United States nationals
in 1960 when the Treaty was signed; it ruled
that, even if the Treaty did waive Poland’s
sovereign immunity, it could do so only as to
persons who were United States nationals in 1960.
After the district court ruled, Mr. Haven and Mr.
Welbel sought leave to establish that they were,
in fact, United States nationals at the time of
the Treaty. The district court then determined
that, if they were United States nationals at the
time of the Treaty, the Treaty itself would
foreclose their claim. Because we believe that
nothing in the Treaty contemplates a waiver of
Poland’s sovereign immunity, we need not
determine whether Mr. Haven and Mr. Welbel were
United States nationals in 1960.

1.

      The text of the Treaty contains no mention of
any waiver of sovereign immunity. It does not
even mention the availability of a cause of
action in the United States courts. There is
therefore no basis for finding that the Treaty
waived Poland’s sovereign immunity. A foreign
sovereign does not waive its sovereign immunity
"by signing an international agreement that
contains no mention of a waiver of immunity to
suit in United States courts or even the
availability of a cause of action in the United
States." Argentine Republic v. Amerada Hess
Shipping Corp., 

, 442-43 (1989); see
also Creighton Ltd. v. Government of the State of
Qatar, 

, 123 (D.C. Cir. 1999); Smith
v. Socialist People’s Libyan Arab Jamahiriya, 

, 245-46 (2d Cir. 1997).

     Even if Mr. Haven and Mr. Welbel had been United
States nationals in 1960, the Treaty could not be
said to waive Poland’s sovereign immunity.
Indeed, the text of the Treaty makes plain that
Poland expected the Treaty to eliminate any
obligation it had to defend against claims by
United States nationals for nationalized
property. The President of the United States has
the authority to renounce or extinguish claims of
United States nationals against foreign
governments in exchange for lump-sum payments.
See Dames & Moore v. Regan, 

, 679
(1981); Belk v. United States, 

, 709
(Fed. Cir. 1988). The Treaty is an example of an
agreement between the United States and a foreign
sovereign that extinguishes all claims by United
States nationals. See Dames & 

n.9; see also Schmidt v. Polish People’s
Republic, 

, 72 (2d Cir. 1984). The
text of the Treaty is clear. Article I describes
the lump sum payment made by Poland to the United
States as a "full settlement and discharge of all
claims of nationals of the United States." 11
U.S.T. 1953 at Art. I. That lump sum was to be
distributed "in accordance with such methods of
distribution as may be adopted by the Government
of the United States." 

III. Thus, by
the terms of Articles I and III, the United
States replaced Poland as the country responsible
for ensuring that proper compensation was made to
United States nationals who owned land
nationalized by Poland./8 The language of the
Treaty makes explicit that Poland expected the
lump-sum payment to satisfy fully its duties to
United States nationals. It would be futile,
therefore, to allow Mr. Haven and Mr. Welbel to
prove that they were United States nationals in
1960 because the 1960 Treaty did not waive
Poland’s sovereign immunity against United States
nationals.

2.

      Mr. Haven and Mr. Welbel argue, however, that,
although the text of the Treaty does not waive
explicitly Poland’s sovereign immunity, the
language nevertheless permits the invocation of
various exceptions to sovereign immunity. As we
explain in the following paragraphs, however,
these exceptions are not applicable.

      Mr. Haven and Mr. Welbel submit that the Treaty
has waived sovereign immunity by designating that
American law would govern any contractual
disputes. At the outset, we note that no such
clause exists in this treaty. The portion of the
Treaty’s annex cited by Mr. Haven and Mr. Welbel
is a discussion of what persons may seek
recompense under the Treaty; it does not provide
that United States law would govern any
contractual disputes. See Treaty Annex A(b)-A(d)
& B./9 Moreover, although a sovereign may waive
implicitly its immunity through a contract if the
contract "stipulate[s] that American law should
govern any contractual disputes," 

, courts have required a more explicit
waiver in the case of treaties, see 

("[W]aiver by treaty is not included in the list
of examples of implicit waivers.").
      Mr. Haven and Mr. Welbel also contend that,
through the language of the Treaty, Poland sought
assistance from the United States in protecting
against claims asserted through other countries.
Article V of the Treaty states that the United
States would provide to Poland copies of any
formal statements of claim. See Treaty at V.B.
This provision ensured that, once a United States
national was compensated through the Treaty,
Poland would have a record of that national’s
claim being satisfied in order to prevent that
national from asserting another claim through the
government of another nation. Poland’s request
for information about claims filed in the United
States does not make Poland amenable to suit in
United States courts or expressly waive its
sovereign immunity in those courts. Therefore, we
conclude that Article V does not waive Poland’s
sovereign immunity.

      In summary, we are not persuaded that the text
of the Treaty has waived Poland’s sovereign
immunity. "Courts have generally required
convincing evidence that a treaty was intended to
waive sovereign immunity before holding that a
foreign state may be sued in this country."

. There is nothing in
this Treaty to suggest that Poland ever intended
to waive its immunity to suit in United States
courts under any circumstances. The text of the
Treaty does not waive Poland’s sovereign
immunity, regardless whether Mr. Haven and Mr.
Welbel were United States citizens in 1960.

3.

      When a sovereign has protected its immunity
through the language of a treaty, it may
nonetheless waive that immunity by its actions in
United States courts. If a foreign nation brings
an action in a United States court against a
United States citizen, it may waive its immunity
from suit by that individual. See Siderman v.
Republic of Argentina, 

, 722 (9th
Cir. 1992) ("The evidence indicates that
Argentina deliberately involved United States
courts in its efforts to persecute Jose Siderman.
If Argentina has engaged our courts in the very
course of activity for which the Sidermans seek
redress, it has waived its immunity as to that
redress."). There is no allegation that Poland
ever "deliberately involved United States courts"
in any matter involving either Mr. Haven or Mr.
Welbel. Thus, Poland has not waived its sovereign
immunity by any action relating to the Treaty.

C.

      Mr. Haven and Mr. Welbel’s final argument that
the district court had subject matter
jurisdiction is based on the FSIA’s commercial
activity exception. A foreign sovereign may waive
sovereign immunity by carrying on commercial
activity in the United States. The FSIA permits
jurisdiction in any case:

in which the action is based upon a commercial
activity carried on in the United States by the
foreign state; or upon an act performed in the
United States in connection with a commercial
activity of the foreign state elsewhere; or upon
an act outside the territory of the United States
in connection with a commercial activity of the
foreign state elsewhere and that act causes a
direct effect in the United States.

28 U.S.C. sec. 1605(a)(2). This subsection
requires that the lawsuit itself must be "based
upon" the commercial activity that supports a
waiver of sovereign immunity. See Saudi Arabia v.
Nelson, 

, 358 (1993); Santos v.
Compagnie Nationale Air France, 

, 892
(7th Cir. 1991) ("This Court and most others have
stated that the term ’based upon’ requires an
’identifiable nexus’ between the claim and the
commercial activity at issue."); Rush-
Presbyterian-St. Luke’s Med. Ctr. v. Hellenic
Republic, 

, 582 (7th Cir. 1989). The
Fifth Circuit has explained that "there must be a
connection between the plaintiff’s cause of
action and the commercial acts of the foreign
sovereign." Stena Rederi AB v. Comision de
Contratos del Comite Ejecutivo General del
Sindicato Revolucionario de Trabajadores
Petroleros de la Republica Mexicana, S.C., 

, 386 (5th Cir. 1991); see also Byrd v.
Corporacion Forestal y Industrial de Olancho
S.A., 

, 389 (5th Cir. 1999) (quoting
Stena Rederi); In re Tamimi, 

, 280
(4th Cir. 1999) (same).

      The commercial activities alleged by Mr. Haven
and Mr. Welbel are internet advertisements for
insurance marketed by PZU and efforts by PZU to
market insurance to United States consumers.
Assuming without deciding that the alleged
activities constitute commercial activity in the
United States, these activities bear no relation
to the claims raised by Mr. Haven and Mr. Welbel.
Any current efforts by PZU to market insurance in
the United States have no relationship to PZU’s
role in the nationalization of property in Poland
after World War II. Thus, this lawsuit is not
"based upon" commercial activity in the United
States, and the commercial activity exception of
the FSIA cannot apply.

Conclusion

      For the foregoing reasons,/10 the judgment of
the district court is affirmed.

AFFIRMED

/1 When reviewing a dismissal for lack of subject
matter jurisdiction, we assume the truth of the
plaintiffs’ factual allegations and consider
those allegations in the light most favorable to
the plaintiffs. See Komorowski v. Townline Mini-
Mart & Restaurant, 

, 964 (7th Cir.
1998) (per curiam).

/2 Mr. Haven and Mr. Welbel sought appointment as
representatives of a class. The district court
never reached the issue of class certification.

/3 The court also held that Poland’s objection to
the service of process was erroneous, and that
process had properly been served on Poland.

/4 The district court’s order assumed that Mr. Haven
and Mr. Welbel were not United States nationals
at the time of the Treaty, and thus outside the
Treaty’s scope. After Mr. Haven and Mr. Welbel
filed supplemental materials with the court
stating that they may have been United States
nationals in 1960, the district court issued an
October 4 supplemental order, finding that if
they were United States nationals in 1960, their
claims were foreclosed by the Treaty itself.

/5 Accord Bowden v. United States, 

, 555
(D.C. Cir. 1999); United States ex rel. Saaf v.
Lehman Bros., 

, 1308 (9th Cir. 1997)
(per curiam); Barbara v. New York Stock Exch.,
Inc., 

, 56 (2d Cir. 1996); Brever v.
Rockwell Int’l Corp., 

, 1131 (10th
Cir. 1994).

/6 Normally, the objection must be made by the
Central Authority of the foreign sovereign, which
informs the applicant of its objections. See
Hague Convention at Art. 4. In this case we are
not asked to decide whether Poland followed the
correct procedure under the Hague Convention in
its objection to service, only whether Poland’s
objection to the service of process was in the
form of a responsive pleading.

/7 Mr. Haven and Mr. Welbel seek to distinguish
Hirsh on the ground that in that case, Germany’s
letter to the court expressly reserved its
sovereign immunity defense, unlike Poland’s
letter here. Although the court in Hirsh noted
language in Germany’s letter reserving a
sovereign immunity defense, the court actually
relied on the fact that the letter itself was not
a responsive pleading. See 

.
/8 The United States fulfilled, through the Foreign
Claims Settlement Commission (the "FCSC"), its
obligation to make whole its nationals who owned
land seized by Poland. The FCSC has jurisdiction
to adjudicate claims brought by any United States
national arising under:

the terms of any claims agreement concluded on or
after March 10, 1954, between the Government of
the United States and a foreign government
(exclusive of governments against which the
United States declared the existence of a state
of war during World War II) similarly providing
for the settlement and discharge of claims of the
Government of the United States and of nationals
of the United States against a foreign
government, arising out of the nationalization or
other taking of property, by the agreement of the
Government of the United States to accept from
that government a sum in en bloc settlement
thereof.

22 U.S.C. sec. 1623(a)(1)(B). The FCSC disbursed
the funds obtained from Poland in the Treaty. See

(discussing claims for
recompense under the Treaty filed with the FCSC).
The FCSC completed its administration of the
Polish Claims Program in 1966. See Foreign Claims
Settlement Comm’n, Twenty-Fourth Semiannual
Report to the Congress 37 (1996). FCSC decisions
may not be reviewed by a federal court. See 22
U.S.C. sec. 1622g.

/9 The portion of the Treaty Annex cited by Mr.
Haven and Mr. Welbel reads, in full:

A. For the purpose of distribution by the
Government of the United States of the sum to be
paid by the Government of Poland, "claims of
nationals of the United States" are rights and
interests in and with respect to property
nationalized, appropriated or otherwise taken by
Poland which, from the date of such
nationalization, appropriation or other taking to
the date of entry into force of this Agreement,
have been continuously owned, subject to the
provisions of paragraphs B and C of this Annex,

. . . .

(b) directly by juridical persons organized
under the laws of the United States or of a
constituent State or other political entity
thereof, of which fifty per cent or more of the
outstanding capital stock or proprietary interest
was owned by nationals of the United States;

(c) directly by juridical persons organized
under the laws of the United States or of a
constituent State or other political entity
thereof, of which fifty per cent or more of the
outstanding capital stock or proprietary interest
was owned by natural persons who were nationals
of the United States, directly, or indirectly
through interests in one or more juridical
persons of any nationality;

(d) indirectly by natural persons who were
nationals of the United States or by juridical
persons organized under the laws of the United
States or of a constituent State or other
political entity thereof, through interests in
juridical persons organized under the laws of the
United States or of a constituent State or other
political entity thereof which are not included
within category (b) or (c) above[.]

. . . .

B. Juridical persons organized under the laws of
the United States or of a constituent State or
other political entity thereof which have been
reorganized through judicial proceedings after
their property or rights and interests in and
with respect to property were nationalized or
taken by Poland shall participate in the sum to
be paid by the Government of Poland only to the
extent that the outstanding capital stock or
proprietary interest in such juridical persons
was owned, at the time of such nationalization or
other taking, by natural persons who were
nationals of the United States, directly, or
indirectly through interests in one or more
juridical persons organized under the laws of the
United States or of a constituent State or other
political entity thereof.

11 U.S.T. 1953 Annex, at A(b)-A(d) & B.

/10 Because the district court lacked jurisdiction
over this matter, we need not consider the
alternate grounds for dismissal argued by Poland.