James wants to prove he doesn't think he's above the law as Regent (trying to prove a point to the anti monarchist, maybe). He does something wrong and agrees he should pay a price, a privately conducted beating. Knox will supervise to ensure there is no cheating(if you want him to get some hits in, that's fine but I figure he hates to get his hands dirty). Yes, that's why he's going to watch...

They both end up kinda into it. No actual sex but lots of UST and repressed desire and h/c and uncomfortable daddy kink subtext.