by the players themselves through a little thing called etiquette. Yes, it would help if the devs implemented an option thing, but for now I think they have more important things to attend to...like building the economy for example.
I for one always turn down challenges unless the challenge is in a roleplaying way, i.e. we are talking or arguing and they say you have shamed my good name sir, I challenge you to a duel... or something like that. Then we discuss the weapons or no weapons, then duel.
It works, people should try it sometime... makes dueling much more fun.
My thoughts,
Xirius