We have been experiencing SQL Server deadlocks on our target application side.
Not sure what you mean.
The deadlocks are happening on the IS side?
Are JDBC Adapter services hanging?
What is your JDBC Connection pool size?
Does it happen for each call to SQL Server or only under load?
What version of IS?
What patches are installed?
Can you get a JVM thread dump?
Is it any operation against SQL Server or a particular one?
If you are doing multiple updates of a single SQL Server table from different IS threads the SQL Server isolation level will come into play. For instance, page level locks will stop other updates on data in the table until a commit.