I will write what I'm trying to do. I'm connected to my ssh server runing on Ubuntu. I'm running two commands in one, seperated by ";" (something like "cd blabla; ls -l) so I get the items in the folder. When I use the default encoding I get the name of items with any problem, diacritics is there. But when I use diacritics in the comand ("cd čřšč; ls -l") I get an error that the folder doesnt exist. When I use some other encoding (windows1250 or ISO-8859-2) that should be able to work with my diacritics, I even get the wrong names of items (I get Äěť and ÄĹ instead of češ and čř (those are names of folders)).
I hope it helps you.