An arena inside a protected spawn can keep blocking combat after you set pvp allow. For a location with overlapping regions, WorldGuard uses the highest-priority region that defines the flag. At equal priority, deny wins.
Find out which layer blocks combat
If combat also fails in an unprotected area, check the world setting. On Java 1.21.9 or newer, run /gamerule pvp in the arena world. On 1.21.8 and older, check pvp in server.properties. A region flag cannot enable combat when the underlying world disables it. Review protections outside the arena before changing a world-wide setting.
Give the arena a higher priority
Run the commands in the world that contains both regions. This example assumes spawn has priority 0 and contains an existing arena region. The first two commands show the actual region names and priorities. Use a higher number than spawn has if it is already at 10 or above.
/rg info spawn
/rg info arena
/rg flag spawn pvp deny
/rg setpriority arena 10
/rg flag arena pvp allow
Test with two ordinary player accounts inside the arena, in spawn and across the border. If the result differs, check other overlapping regions, team friendly fire and any world-management plugin that controls PvP.