UnicodeDecodeError exception in merge

I've tried to create a simple example but I wasn't able to reproduce such error. So the following output of bzr is the only thing I can provide (I'm not allowed to attach the repository with our sources).

mueller@gvdev-BZR/partn-vn-plausi > bzr merge $VWS_URL/build-sys/C++
+N src/InetGv/unbenutzt/
+N src/batch/pdf/RLAST_BRIEF.pdfconf.xml
+N src/batch/rech.py
+N src/test/allgemein/start_europ_assistance
+N src/test/allgemein/start_pr_mhn_pdf
+N src/test/allgemein/start_zelst
+N src/test/auto/vtrag_ms/
+N src/test/auto/vtrag_ms/main.c
+N src/test/auto/vtrag_ms/richtig
R src/InetGv/cgi_anmeldung/ => src/InetGv/unbenutzt/cgi_anmeldung/
R src/InetGv/cgi_antrag/ => src/InetGv/unbenutzt/cgi_antrag/
 M src/SConscript.py
 M src/batch/angeb_pdf/angeb_pdf.c
 M src/batch/dbeinaus/zelst_mods.c
 M src/batch/join_pdf.py
 M src/batch/pdf/ANSCHREIBEN.pdfconf.xml
 M src/batch/pdf/ANSCH_PAB.pdfconf.xml
 M src/batch/pdf/ANSCH_V_MHNLI.pdfconf.xml
 M src/batch/pdf/ANTRAGSTELLER.pdfconf.xml
 M src/batch/pdf/BAUHERR.pdfconf.xml
 M src/batch/pdf/BAULEISTUNG.pdfconf.xml
 M src/batch/pdf/BUEROHAFT.pdfconf.xml
 M src/batch/pdf/GEWAESSER.pdfconf.xml
 M src/batch/pdf/GLAS.pdfconf.xml
 M src/batch/pdf/GLAS_BUERO.pdfconf.xml
 M src/batch/pdf/HAUSRAT.pdfconf.xml
 M src/batch/pdf/HAUSRAT_2006.pdfconf.xml
 M src/batch/pdf/HGRUNDHAFT.pdfconf.xml
 M src/batch/pdf/HGRUNDHAFT_2007.pdfconf.xml
 M src/batch/pdf/HGRUNDHAFT_VERW.pdfconf.xml
 M src/batch/pdf/HGRUNDHAFT_VERW_2007.pdfconf.xml
 M src/batch/pdf/INET_REGDRU.pdfconf.xml
 M src/batch/pdf/MAHNUNG.pdfconf.xml
 M src/batch/pdf/MIETVERL.pdfconf.xml
 M src/batch/pdf/MIS_liste.pdfconf.xml
-D src/batch/pdf/MITTLG_LEER.pdfconf.xml
 M src/batch/pdf/MITTLG_SAN_KUENDIGUNG.pdfconf.xml
 M src/batch/pdf/MITTLG_SAN_MITTEILUNG.pdfconf.xml
 M src/batch/pdf/POLICE.pdfconf.xml
 M src/batch/pdf/POLICE_UEBERWEISUNG.pdfconf.xml
 M src/batch/pdf/POLICE_info.pdfconf.xml
 M src/batch/pdf/POLICE_info_vtr.pdfconf.xml
 M src/batch/pdf/POLICE_vtr.pdfconf.xml
 M src/batch/pdf/PRIVHAFT.pdfconf.xml
 M src/batch/pdf/PRIVHAFT_2003.pdfconf.xml
 M src/batch/pdf/PRIVHAFT_GILDEN.pdfconf.xml
 M src/batch/pdf/PRIVHAFT_PRODOMO.pdfconf.xml
 M src/batch/pdf/PROVABR.pdfconf.xml
 M src/batch/pdf/RECHNUNG_LASTSCHRIFT.pdfconf.xml
 M src/batch/pdf/RECHNUNG_UEBERWEISUNG.pdfconf.xml
 M src/batch/pdf/SCHADENDOK.pdfconf.xml
 M src/batch/pdf/SCHECK.pdfconf.xml
 M src/batch/pdf/TIERHAFT.pdfconf.xml
 M src/batch/pdf/UNFALL.pdfconf.xml
 M src/batch/pdf/UNFALL_FAMILIE.pdfconf.xml
 M src/batch/pdf/UNFALL_SINGLE.pdfconf.xml
 M src/batch/pdf/VTRET_MHN_LISTE.pdfconf.xml
 M src/batch/pdf/WO_EIN.pdfconf.xml
 M src/batch/pdf/WO_EIN_QM.pdfconf.xml
 M src/batch/pdf/WO_MEHR.pdfconf.xml
 M src/batch/pdf/WO_MEHR_VERW.pdfconf.xml
 M src/batch/pdf/deckblatt.pdfconf.xml
 M src/batch/pr_mhn_pdf/pr_mhn_pdf.c
-D src/batch/pv_EXE_BATCH_FILES
-D src/batch/pv_MvAllBatchesToPro
-D src/batch/pv_RcpAllBatchesTo_gvdb
 M src/batch/rech/pr_pol.c
 M src/dialoge/allgemein/pa_dfd.def
 M src/dialoge/allgemein/pa_mods.c
 M src/dialoge/allgemein/schaden.c
 M src/dialoge/allgemein/sl_mods.c
 M src/dialoge/av/av_mods.c
 M src/dialoge/av/vt_dat.c
 M src/dialoge/av/vt_sppol.c
 M src/dialoge/partner/dialog/wrAkDat.inc
 M src/geschaeft/allgemein/pr_druck_pdf.c
 M src/geschaeft/allgemein/spool_ms.c
 M src/geschaeft/allgemein/vtrag_ms.c
 M src/geschaeft/allgemein/vtrag_ms.ext
 M src/geschaeft/allgemein/vwsdb.py
 M src/geschaeft/db/aktio_pt.pc
 M src/tech/allgemein/date.c
 M src/tech/allgemein/date.ext
 M src/tech/allgemein/u_mods.c
 M src/test/allgemein/start_angeb_pdf
 M src/test/ps_spool/main.c
Text conflict in src/SConscript.py
Text conflict in src/dialoge/allgemein/pa_mods.c
Text conflict in src/geschaeft/allgemein/vtrag_ms.c
Text conflict in src/geschaeft/db/aktio_pt.pc
Text conflict in src/tech/allgemein/u_mods.c
5 conflicts encountered.
bzr: ERROR: exceptions.UnicodeDecodeError: 'ascii' codec can't decode byte 0xc3 in positio
n 55: ordinal not in range(128)

Traceback (most recent call last):
  File "/usr/local/Python-2.5/lib/python2.5/site-packages/bzrlib/commands.py", line 806, i
n run_bzr_catch_errors
    return run_bzr(argv)
  File "/usr/local/Python-2.5/lib/python2.5/site-packages/bzrlib/commands.py", line 762, i
n run_bzr
    ret = run(*run_argv)
  File "/usr/local/Python-2.5/lib/python2.5/site-packages/bzrlib/commands.py", line 492, i
n run_argv_aliases
    return self.run(**all_cmd_args)
  File "/usr/local/Python-2.5/lib/python2.5/site-packages/bzrlib/builtins.py", line 2873,
in run
    cleanup()
  File "/usr/local/Python-2.5/lib/python2.5/site-packages/bzrlib/workingtree_4.py", line 1
119, in unlock
    self.flush()
  File "/usr/local/Python-2.5/lib/python2.5/site-packages/bzrlib/workingtree_4.py", line 2
97, in flush
    self.current_dirstate().save()
  File "/usr/local/Python-2.5/lib/python2.5/site-packages/bzrlib/dirstate.py", line 1974,
in save
    self._state_file.writelines(self.get_lines())
  File "/usr/local/Python-2.5/lib/python2.5/site-packages/bzrlib/dirstate.py", line 1506,
in get_lines
    return self._get_output_lines(lines)
  File "/usr/local/Python-2.5/lib/python2.5/site-packages/bzrlib/dirstate.py", line 1842,
in _get_output_lines
    inventory_text = '\0\n\0'.join(lines)
UnicodeDecodeError: 'ascii' codec can't decode byte 0xc3 in position 55: ordinal not in ra
nge(128)

bzr 1.1.0 on python 2.5.0.final.0 (linux2)
arguments: ['/usr/local/bin/bzr', 'merge', 'sftp://vvw@localhost/u/users/vvw/bzr-rep/vws//
build-sys/C++']
encoding: 'ISO-8859-15', fsenc: 'ISO-8859-15', lang: 'de_DE@euro'
plugins:
  bzrtools /usr/local/Python-2.5/lib/python2.5/site-packages/bzrlib/plugins/bz
rtools [1.1.0]
  launchpad /usr/local/Python-2.5/lib/python2.5/site-packages/bzrlib/plugins/la
unchpad [unknown]
  multiparent /usr/local/Python-2.5/lib/python2.5/site-packages/bzrlib/plugins/mu
ltiparent.pyc [unknown]
*** Bazaar has encountered an internal error.
    Please report a bug at https://bugs.launchpad.net/bzr/+filebug
    including this traceback, and a description of what you
    were doing when the error occurred.