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This is correct functionality.
Per Oracle Applications User's Guide
Under Customizing the Presentation of Data in a Folder
With the addition of multi–language support, folders are associated with specific languages.
Existing folders are associated with the base language of the Site and new folders are associated with the language used when the folder is created.
Folders can only be accessed when the Applications are running in the same language that is associated with the folder.
For example, a folder created in the French version of Applications cannot be accessed when running the Applications in German.