The guards in the tower overlooking the arena will reveal the wraith was once a man named Ulle the Unlucky, who lost every bout he fought and during one tournament was paired against the jarl Thormar, who ridiculed Ulle so much the warrior killed the jarl while they were in the arena, and thus the jarl cursed him that he should never win a fight. Also, for maximum reward and experience, talk with the guards before lifting the curse. Note: you must talk with the guards in the tower or the wraith first to fight him, otherwise your strikes will do nothing against him and he won't fight back. Head to the arena in Hov on Spikeroog to learn of a wraith that haunts the arena, preventing warriors from fighting in it.