When you open the file and copy / paste it into the browser, it ends in Unicode, as the browser user interface is used internally. Who actually performs the conversion from ISO-8859-1 to Unicode depends on several factors (which OS you use, regardless of whether your selected text editor is compiled to use Ansi or Unicode, which clipboard format (s) - CF_TEXT for Ansi, CF_UNICODETEXT for Unicode - the application uses for copying, etc.). But anyway, when the web browser submits the form, it then encodes its Unicode data into HTML / form encoding during the submission.
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