Emacs+Slime+CCL file loading issue with utf-8

Question

Just switched to emacs today, was using the ccl app you get via apple store.

I'm getting the following when I try to load a file via C-c C-l:

While compiling UPDATE_BACK :
Bad lambda list : (SELECTOR &KEY |ȦÅ| |ȦǨ®| |ìÃë|
                   |ǵɨŤ| |È¡ÅÅ| |ÆÅ·ÇÆ|
                   |Žĸ­Å| |Ç«Å| ...)
[Condition of type CCL::COMPILE-TIME-PROGRAM-ERROR]

It seems to be an encoding issue since ccl reads it perfectly fine when I copy paste.

I've already set my ~/.emacs to include:

(set-language-environment "utf-8")

What am I doing wrong?

p.s. the original text was in Japanese (both kanji and kana); not sure if i'm using the wrong language environment?

edit: the original code:

(defun update_back 
    (
    selector &key 
    a b c  
    ...
    )
    (setf *db*
        (mapcar
        #'(lambda (row)
            (when (funcall selector row)
                (if a               (setf (getf row :a) a))
                (if b               (setf (getf row :b) b))
                (if c               (setf (getf row :c) c))
                ...
            )
        row) *db*
        )
    )
)

where a b c are replaced by kanji/kana characters.