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In White Dwarf 506, pg. 46, it states "players take in turns to select an eligible unit from their army, one at a time, and fight with them, in turn order, starting with the player whose turn is next." Let's say we have 3 players (players 1-3) and player 1 is the active player. He's charged a unit into one of Player 2's units. Does this mean in the Fight phase that Player 2 would choose unit a first? And how does fights first work in all of this?

Many thanks to anyone who can solve this Gordian knot!

The fight phase is divided into two parts;
Fights First & Remaining Combats.

In the first half (if you are using the free for all rules) all units with fights first that are eligible to fight do so starting with the player whose turn is next, then the one after that and so on unit all units with fights first have fought. After this all other units that are eligible to fight can do so, once again starting with the player whose turn is next and so on.

So for you example, if we assume that only the unit that charged has fights first player 1 has that unit fight and once that fight is resolved any other units that are eligible can be selected one at a time starting with player 2, then 3, then 1 and so on.