That's complicated...
They in theory could be encountered inside SE (simulated exploration, where you send parties to explore lands around the city). But you don't actually SEE them in action, since you cannot send MC to SE. And all fights in SE go off-screen, inside the code.
So you can encounter them in arena and certain areas inside SE, but you can SEE them in arena only. Well, at least for now. I can't add events with BE until Xela will make a simpler function for it, but I will. And then there will be events too.