In my own opinion, I think this is very much fair. It's a good way to get children to understand that there are consequences to your actions and it also prepares them for the real world as well. I think this is a good idea because if you are being told to do something and you don't listen and still expect to not get in trouble then you are SO SO SO VERY WRONG! This is a good justice system and I think that all schools should have this.
(Everything else will have to come from your mind)