I think the author is right that those terms are flexible (maybe arbitrary is too strong). They depend on value judgements or the ability to know someone else's

I think the author is right that those terms are flexible (maybe arbitrary is too strong). They depend on value judgements or the ability to know someone else's mental state. "Bad faith" is a great example. It's easy to label someone "bad faith" just because you disagree with them and I find that's common. Whether this flexibility is a problem or a virtue is another question. When the author calls for us to eliminate these flexible laws/norms, he's trying to formalize something quite vague. Even if that's possible I'm not sure it's desirable. Perhaps when it comes to millions of people living together in harmony, vagueness is a good thing.