I checked in code some time back which sets the collation type of string literal to be same as the compilation schema. The advantage of this is that metadata queries will work without changes since those queries do character string literal comparisons.
But the wiki page at http://wiki.apache.org/db-derby/BuiltInLanguageBasedOrderingDERBY-1478 in Section Collation Determination, Rule 1) says that character string literal should always take the collation of user schema. This decision was based on the discussion in the Collation feature discussion thread at http://www.nabble.com/Collation-feature-discussion-tf3418026.html#a9675967. SQL spec defines the behavior here to be implementation defined (it says that in a convoluted way which can be found in the Collation feature discussion). But considering the impact it will have on the metadata queries (they will have to be changed so that we CAST character string literals so that they will take the collation of system schema and hence the comparison will not fail), should we reconsider our decision made on the wiki page.