Bloodsport II.

After thief Alex Cardo gets caught while stealing an ancient katana in East Asia, he soon finds himself imprisoned and beaten up by the crowd there. One of the guards, Demon, feels upset by Alex appearance and tortures him as often as he gets the opportunity. Alex finds a friend and mentor in the jailhouse, Master Sun, who teaches him a superior fighting style called Iron Hand. When a 'best of the best kumite' is to take place, Demon gets an invitation. Now Master Sun and Alex need to find a way to let Alex take part in the kumite too.