Ben Mikaelsen's Touching Spirit Bear is one of the only works of fiction to explore the concept of Circle Justice, but Mikaelsen comments on a specific application of a real, legal process used both in Native American systems and in some Western systems.
The entire premise of this book is that Circle Justice allowed Cole Matthews to serve his punishment in an alternative way by being banished to an Alaskan island where he could do no harm to others and where he could commune with nature in a healing process. Mikaelsen himself admits in the "Author's Note" that banishment to an island is not the traditional sentence of Circle Justice even within native communities.
In native tribes, particularly the Tlingit tribe, Circle Justice has been used for centuries to deal with criminal problems in the community. It usually involved spiritual or cultural traditions such as sweats, sacrifice, ceremonies, or other similar activities. Generally, the tribes find that this helps foster unity not just between the convicted and others in society but also between the members of the circle who would otherwise not have a reason to come together for the betterment of their community.
In the Western context, the legal use of Circle Justice has its origins in Canada, where many of these tribes exist. The term used by some in Canada is "Circle Sentencing." The guidelines and requirements for circle sentencing were laid out in a 1995 case. Ordinarily, there must be a conviction of guilt or an acceptance of guilt by the accused, along with true contrition for one's actions. According to the Native Law Centre of Canada, circle sentencing "presents a healthy opportunity for emotional expression of grieving, anger, and support, and has a strong focus on accountability, reparation and restoration of peaceful and just relations in the community."
For the circle sentencing even to be a possibility, the judge, victim, police, and community members must all make themselves available and willing to invest time to monitor the criminal's progress. This requirement is why it has been difficult to spread too far since it is very time-intensive. The "sentences" can still include jail but might also include Indian customs such as those described above, counseling, and more.
In the US, the only state to use circle sentencing (and even then, only in very limited cases) is Minnesota, and this perhaps explains Mikaelsen's choice of that state as the setting for Cole's hometown. While it can be a very rewarding experience as seen in Touching Spirit Bear and in other anecdotal accounts, it is still unclear whether Circle Justice is a model that can be widely replicated. It certainly is an interesting alternative to the traditional criminal justice system.