Thanks guys!

My putty terminal was using ISO-8859 encoding by default and my java client
was generating ASCII files

Changing putty to UTF8, I was able to get it working by creating the file
directly on the filesystem

:/# file .dovecot.sieve
.dovecot.sieve: UTF-8 Unicode text

and through telnet

:/# file .dovecot.sieve
.dovecot.sieve: UTF-8 Unicode text, with CRLF line terminators

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