diff --git a/mozilla/suite/common/directory/directory.js b/mozilla/suite/common/directory/directory.js
index fb5449adc3e..2e9c8e01d16 100644
--- a/mozilla/suite/common/directory/directory.js
+++ b/mozilla/suite/common/directory/directory.js
@@ -55,10 +55,15 @@ function Init()
     }
     debug("base URL = " + baseURI + "\n");
     
+    // Note: set encoding for FTP URLs BEFORE setting "ref"
+    HTTPIndex.encoding = "ISO-8859-1";
+
+    // re-root the tree
     tree.setAttribute("ref", baseURI);
 }
 
 
+
 function OnClick(event)
 {
     if( event.type == "click" &&