Uncaught URIError: URI malformed - jquery UI tabs on Windows

I'm using jquery UI tabs in a local Windows development environment. I'm testing with their demo code

<div id="tabs">
  <ul>
    <li><a href="#tabs-1">Nunc tincidunt</a></li>
    <li><a href="#tabs-2">Proin dolor</a></li>
    <li><a href="#tabs-3">Aenean lacinia</a></li>
  </ul>
  <div id="tabs-1">
    <p>Proin elit arcu, rutrum commodo, vehicula tempus, commodo a, risus. Curabitur nec arcu. </p>
  </div>
  <div id="tabs-2">
    <p>Morbi tincidunt, dui sit amet facilisis feugiat, odio metus gravida ante, ut pharetra massa metus id nunc. Duis scelerisque molestie turpis. Sed fringilla, massa eget luctus malesuada, metus eros molestie</p>
  </div>
  <div id="tabs-3">
    <p>Mauris eleifend est et turpis. Duis id erat. Suspendisse potenti. Aliquam vulputate, pede ve</p>

  </div>
</div>

The problem is that I'm getting a "Uncaught URIError: URI malformed" on this function:

function isLocal( anchor ) {
    return anchor.hash.length > 1 &&
        decodeURIComponent( anchor.href.replace( rhash, "" ) ) ===
Uncaught URIError: URI malformed
            decodeURIComponent( location.href.replace( rhash, "" ) );
} 

I suspect this is due to the URI on windows environment that looks like this:

file:///C:/Work/my%20project/yadda%20ac%E7%F5es%20yadda/submenu.html#tabs-1

How can I have it working on local Windows, since my clients will want to see it working there before going live? I've tested and I know this is being caused by the encoding of the special characters on the uri (like on the word "acções"). Is there a way to have it working even with special characters?

I know I can fix this simply by removing these characters and re