The Supreme Court ruled Friday that commercial moneylender Lopro Corp. effectively charged too much interest on loans that its affiliate charged fees to guarantee.
The ruling marks the first top court judgment with regard to several hundred pending lawsuits seeking refunds from the Kyoto-based company over excessive interest payments.
Lower court rulings have varied from case to case.
Presiding Judge Shigeo Takii, of the top court's five-member No. 2 Petty Bench, said the guarantee payments constitute de facto interest payments and that the combined figure of guarantee and interest payments surpasses the legal limit governing interest payments.
The plaintiffs are two guarantors for loans extended by Lopro in the 1990s to a now-bankrupt company.
After the company went bankrupt in 1998, the two paid 4 million yen each to Lopro.
The plaintiffs are demanding that Lopro return guarantee payments that the moneylender forces borrowers to pay to its affiliate. They said the payments were de facto interest payments that they did not have to pay.
Lower courts, however, ruled that the plaintiffs were required to pay part of the sum demanded for guarantees. The Tokyo High Court said they should pay a total of 3.58 million yen.
The Supreme Court sent the case back to the high court, demanding it be tried again.
Lopro boasts a client base of some 35,000 firms.