Can not copy read only file on a nfs mounted partition

While trying to copy a file with permissions 444 (read only for everybody) I get:

ecryptfs_initialize_file: Error attempting to initialize the lower file for the dentry with name

The problem occurs on a NFS mounted ecryptfs directory.
Details:
- Host <host1> exports directory /mnt/nfs_shared
- Host <host2> mounts /mnt/nfs_shared using NFS
- Host <host2> mounts /mnt/nfs_shared/encrypted to a local directory ~/Private
host2:$ touch ~/Private/test
host2:$ chmod 444 ~/Private/test
host2:$ cp ~/Private/test ~/Private/test1
ecryptfs_initialize_file: Error attempting to initialize the lower file for the dentry with name

I tested the above on <host1> and it works.
I tested the above on the non-encrypted directory "/mnt/nfs_shared/non_encrypted" and it works.

I'm using latest Ubuntu Server 64bit.
Your help will be appreciated.