This is after roughly 15 rounds....
No one's losing any significant health. The battle could go on forever and never finish. The ONLY only option is to forfeit.
The Gauntlet REALLY should have a "draw" setting where characters are NOT seen as used, the battle is NOT seen as a "loss".
If anything the AI should forfeit.
Ahh and you say "disable passives" sure... but what Magus character does that? I know gunners, sentinel, assassin and (I think) warriors that will.. but not Magus.