It's not, and it's not Toriyama's invention either. It's a real theory of time travel and paradox-resolution.
The idea is for single timeline theory. If there is only one timeline, then there can't really be paradoxes. If the future ends in a different conclusion than the events leading up to it suggest because of the future being altered, then the past would automatically reshuffle itself to correct for the disturbance so that there is consistent causation in the timeline.
An alternate version of this same principle suggests that altering the past is actually impossible, because the past has to lead to the future as it already was laid out. So basically any time you were about to alter it, something would prevent it from happening (try to shoot Hitler and your gun jams, etc.).
It's not how Back to the Future handles it, or most popular fiction, but it is a real time travel theory.
Looping timelines are also a real time travel theory, and they throw in a nod to that when you beat the game. They put the intro cutscenes of Lightning battling Caius at the end of the timeline instead of the beginning, because she was constantly looping and endlessly battling Caius over and over with failed outcomes.
Most of it is over my head, considering I'm not a theoretical physicist, but even browsing wikipedia can be fun for looking at how varied time travel theories are. Most of the single timeline theories seem to suggest that paradoxes are impossible, which is why timelines must auto-correct themselves. Toriyama kind of mixes single timeline theories with the existence of paradoxes, so it's definitely a bit different but still grounded in the same ideas.
http://en.wikipedia.org/wiki/Time_travel
http://en.wikipedia.org/wiki/Temporal_paradox
XIII-2 isn't perfect, and there are some loose ends or some things that don't make perfect scientific sense. But I still think they actually tried to introduce some new and interesting elements into time travel travel game fiction, and generally I think it's one of the better time travel games.