This is the courtyard of Shang Tsung’s Island Fortress in the Lost Sea. Great tournaments have been held here for centuries. Guards patrol and students watch warriors engage in Mortal Kombat. It is sometimes referred to as simply "The Courtyard" or "Shang Tsung's Courtyard".
This arena first appeared in the first Mortal Kombat game. In it, an aged Shang Tsung sits on a throne and watches the Mortal Kombat tournament. Monk students also watch and applaud after every round is finished. This is reminiscent of the tournament courtyard from the movie set of Enter the Dragon. In Mortal Kombat Trilogy, when fighting in this arena, Shang Tsung has been replaced with Shao Kahn. It should be noted that the scepter that Kahn holds is not the same as the one in Kahn's Arena and Kahn's Kave. Also, the monks are no longer animated nor do they applaud after a round is over.
A different version of this same arena was featured in Mortal Kombat: Deception. The kombatants now simply stand on a completely square shaped elevated platform. The monks are no longer in the front of the stage and has been removed to the sides of the stage. Shang Tsung is still sitting in his seat in his original appearance and watch as the fights commence.
In Mortal Kombat (2011), there is a day and night version of Shang Tsung's Courtyard.
An arena very similar to the Courtyard appears in the Mortal Kombat movie. It is seen during the fight between Liu Kang and the Fighting Monk, and the match between Sonya Blade and Kano, respectively. The movie's Courtyard also features a stone fighting area, an audience, and a throne upon which Shang Tsung sits and officiates.