Frankly, there is no fair way of assigning grades without an exam, unless this was a course based subject known about for the previous 2 years. (But I understand that course work element was removed some years ago)
As I understand it, the grades were based originally on teacher predicted grades, which are used every year for students to choose universities to apply for. Predicted grades, themselves are often based on mock exams (usually set by the teacher, but could also be past papers), assignments over the previous year, and I imagine also the teacher may include participation in the classroom, but this last is speculation.
The problem is that lots of students put more effort into the actual exam. I think it possible the bias will favour girls, who tend to work more consistently throughout the year, but the sudden dropping of exams must feel really unfair.
Teacher bias works both ways, and they can predict a lower mark than obtained, but usually is higher.
I understand the teachers were also asked to rank the students in order. Then the algorithm included past years on how well the school performed, and how accurate past predictions were compared to grades.
So, if there is a very bright student in a poor performing school, the student is likely to be downgraded by this moderated algorithm.