Al-ḥākimiyyah means that there is no legislator except Allah and this means that the rulers who enact laws adaptable to situations and new incidents are disbelievers.
This is an erroneous idea because Prophet Muḥammad (PBUH) himself gave his companions the right to make Ijtihād at a time where movements and relations were very simple. The Prophet (PBUH) did not forbid them from coming up with new solutions for problems. Now, Muslim lands largely expanded and the twenty first century produced countless new problems and new incidents which require shar‘ī responses.
The issue of Al-ḥākimiyyah resulted in controversy, problems and conflict between different sects such as al-Khawārij and Shia and the Takfīris (those who declare Muslims as disbelievers) of our time. They misunderstood it and applied it out of its rightful context. Accordingly, sovereignty turned from being to "Allah" to be for the "groups and sects" which claimed to be vicegerents to Allah and spread corruption and bloodshed on earth in His Name.