@vladthetransilvanian - it could quite possibly be a cultural thing, and looking back at the line:
それでわ ここで 問題です!
Literally translated in Google, this becomes 'That's why I'm here!'
I veered down that way as it makes sense with the Judge Dredd "I am the law" title, yet on second look Iori's comment presents as 'So it's only a problem here' which is closer to the original scanlation. For it to fit translation wise, perhaps him saying "Well the laws don't apply here" or something where he's saying it's not a big matter despite it being law is more appropriate.
What the girlfriend says:
あれ道交法的にいいの?
Literally, this can stand for 'Oh the road laws say that's ok?' and she can be implicitly expressing that it would be fine for her to drive a car like that too.
So yes the scanlation's text of "Is that allowed?" also makes sense. The law joke is lost in the response and follow up:
Iori: それでわ ここで 問題です! - That's the problem here! (literally correct)
Girlfriend: やだ - No way! (harder to express)
If you were to interpret it culturally, shouldnt the manga author have done a switcheroo and had Iori and his girlfriend swap places? That would fit in with the I AM THE LAW setup. They don't swap, she literally shoves her view of the law in his face, and he feels embarassed. She goes kabedon mode and says やだ - NOPE - in BIG BOLD PRINT. To follow the law setup, an appropriate response could be "Oh yes they do! (the laws do apply)" rather than "No way!" which sounds like shes in disapproval but doesnt quite get why Iori looks embarassed and the girlfriend strong (and judging) in the last panel. Granted it may be that he doesn't know what the problem is and she does (regarding the social etiquette) as well.
I am grateful to @AkaiRingo and @KougekiScans for their continued work, and am providing a different perspective with a novice interest in the Japanese language. I am more than happy to post a picture of the page in question as I purchased the volume on Amazon. (If you need online raws that can be arranged too.)
@meridis - I agree with that, yet it is an extremely cultural thing that most traditional people would honour - yes a guy should take the water splashes/car crashes/balls flying from the side by walking to the side nearest to traffic, however it's not strictly followed (Google photos of couples in Japan) and if anything only categorises women as the ones to be protected and not protecting.