For some reason if you select battle rules when going into a pvp match with another player once one player has their first pokemon knocked out the battle immediately is over and the winner is the person who knocked out the first pokemon

Thanks for the report. However, this isn't a problem I can reproduce. Enabling battle rules brings up a Pokémon selection screen at the start of the battle. Make sure you choose all the Pokémon you want in the battle, not just your first one.