This is part of a ring event in the arena in Chelsith. The NPC standing in the middle of the arena, "a worthy contender", is a placeholder for the event. Each time this NPC is killed it has a small chance of triggering the ring event. When a worthy contender dies, if the event is triggered, Bastiz the Merciless will spawn in it's place. Defeat Bastiz, then Sisrira the Undefeated will spawn. Defeat Sisrira, and finally The Undefeated Blade will spawn.
Each NPC in the ring event gets progressively more difficult.