Shahzad, like what shariq said, there are several areas of legislation where Qur'an and Sunnah of the prophet is silent. E.g. the traffic system. What is does the sharia say about which side of the road you can drive on? Left or right? What will be the punishment for running a red light etc.
The Qur'an and Sunnah of the prophet provides guidelines and in these guidelines people can make laws to govern their systems. So I don't think it is against Islam or the Qur'an.
And yes the Qur'an does say that soverignity belongs to Allah SWT, and it also says that Allah has made man his representative or khaleefa on this earth. So those making laws have to keep this in mind that they are not soverign but are simply doing the task Allah has bestowed upon them.