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This test is catalogued with spec-version="1.1" on the test-case element. Perhaps we should allow this, but currently we don't: it's invalid against the schema. As this affects the validity of the catalog and therefore the ability to run any tests, I've made an emergency fix to move the spec-version attribute to the output-file element, and added an expected-error element. Would the test originator please confirm this fix!
My apologies for causing you this inconvenience. On reflection, the XQuery 1.1 keywords should be perfectly acceptable in variable names with an XQuery 1.0 implementation. I've removed the expected error and removed the spec-version attribute.