Phaet indoors
Phaet in the arena
Aradin in the arena

For a fee of 50GP, Phaet will let you fight in Tulimshar arena, which is a PvP area underneath Tulimshar; a small section of the arena is show here: A small section in the center of the Tulimshar Arena

While in the arena, Phaet is accompanied by the intimidating Aradin, another guard. If you don't die in the arena, Phaet can let you back out while inside the arena if you talk to him near the northern part of the arena. Alternatively, you can leave through the exit just north of him.

You can find the script here.