I think it establishes Koga as an honest man who follows the rules in a world that doesn’t reward that kind of behavior.

He has some interesting skills too.

The mayor getting his arm cut off was cool indeed.

Also, Noel wasn’t rewarded for letting the halfling go, instead of killing him and taking Koga for himself.

Once again demonstrating that the rules of this world don’t seem to reward good social tendencies like mercy.