New combatants join in the end of the turn. After that they're inserted by their initiative. Spells/potions can also change initiative order.

Topic about initiative here with probably righter answers.
http://larian.com/forums/ubbthreads.php?ubb=showflat&Number=613496&page=1

Last edited by HybrideZalm; 20/09/17 08:55 PM.