The only form of player killing allowed is between players whose names appear on "who deadly" section of the who list, often referred to as pkill or deadly characters. A battle between non-deadly (peaceful) characters is still illegal even if those who are involved have agreed to the combat. The only exception to this is if an Immortal has agreed to let those involved conduct their combat in the arena. This is not an event that is allowed often at this time.
Being involved in an illegal pkill is a serious violation of law, and can result in a stay in hell, slay, loss of all equipment, freeze and/or deny or site ban.